ECB's Isabel Schnabel is is speaking and says:
- Temporary inflation overshoot is of little relevance if expectations remain anchored.
- ECB is still in a good place
- Iran war creates upside inflation risks.
- Central bank must monitor persistence of energy price shock
- Post-pandemic lessons suggest ECB must tread carefully.
- With inflation projected to be at our target over the medium-term, inflation expectations anchored, monetary policy remains a good place.
Isabel Schnabel is a member of the European Central Bank’s Executive Board and is widely regarded as one of the more hawkish voices within the ECB. A German economist and former professor of financial economics, she has developed a reputation for emphasizing the importance of maintaining the ECB’s credibility in fighting inflation. Schnabel has often warned that inflation pressures—particularly from wages, services, and energy—could prove more persistent than many expect. Because of this, she has repeatedly stressed that policymakers should avoid easing monetary policy too quickly and risk reigniting inflation before it is firmly under control.
More recently, Schnabel has suggested that the ECB is in a relatively good place with current policy settings but should remain cautious given ongoing uncertainty around inflation and external shocks, including higher energy prices. While she supports a data-dependent approach, her tone has generally leaned toward keeping policy restrictive for longer if needed to ensure inflation returns sustainably to the ECB’s 2% target. In market terms, her stance is typically viewed as hawkish, favoring vigilance on inflation and resisting premature rate cuts unless there is clear evidence that price pressures are easing on a durable basis.
