ECB Executive Board member Isabel Schnabel told Die Zeit the bloc will likely need another rate hike to steer inflation back to 2%. She warned that the pace and timing of any move depend on the evolution of the conflict, the economy and price pressures. Schnabel is widely seen as the most hawkish council member.

The ECB lifted rates this month, its first increase since 2023, to curb energy‑driven price gains. Although oil prices have slipped on Middle‑East peace talks, they remain well above pre‑war levels, keeping headline inflation elevated. Markets price in at least one more 0.25‑point hike, which would raise the deposit rate to 2.5%, a level still below what Schnabel considers restrictive.

Schnabel added that May euro‑area data already show the energy shock spilling into broader price dynamics, though second‑round effects have not yet materialised. She noted the Eurozone inflation remains above target, with the economy surprisingly resilient and growth losses milder than many forecasts. Policymakers appear set to keep tightening until price gains subside.

Investors have already priced in a modest rise in sovereign yields, and banks anticipate tighter funding conditions. Christine Lagarde signalled readiness to adjust policy but stopped short of calling for a “more forceful” response, while chief economist Philip Lane warned that inflation could linger above 2% for an extended period. The next decision will test the ECB’s credibility.