ECB's Schnabel: Inflationary impact of Iran war can no longer be ignored

European Central Bank (ECB) Executive Board member Isabel Schnabel said on June 1 that the bank can no longer ignore the inflationary impact of the war in Iran, as price pressures spread beyond the energy sector and the risk of inflation expectations becoming de-anchored grows. She explained that disruptions to energy infrastructure and global supply chains have altered price dynamics in a more lasting way, potentially requiring a policy response even if the conflict ends immediately. Regarding the number of interest rate hikes, Schnabel commented that it is "too early to say" it will end with just a few increases, adding that the ECB must "wait and see how the situation develops." She also noted that the current shock differs from past energy crises, as it is increasingly taking on the character of a global demand shock that is simultaneously raising production costs worldwide.