ECB executive board member Schnabel said the ECB must raise rates further to counter upside inflation risks from a protracted Middle East conflict and stronger‑than‑expected euro‑area growth. She warned consumer prices could remain above 2% for an extended period and that waiting for pass‑through to wages would leave policymakers behind. At current rates inflation is unlikely to return to target in the medium term, she said, so further tightening is necessary. With demand proving resilient, earl

ECB executive board member Schnabel said the ECB must raise rates further to counter upside inflation risks from a protracted Middle East conflict and stronger‑than‑expected euro‑area growth. She warned consumer prices could remain above 2% for an extended period and that waiting for pass‑through to wages would leave policymakers behind. At current rates inflation is unlikely to return to target in the medium term, she said, so further tightening is necessary. With demand proving resilient, early action is needed to prevent second‑round effects; delayed action could require larger tightening later. Schnabel identified fiscal loosening, higher defense spending and a global AI boom as drivers of economic strength, and cautioned that non‑oil energy price pressures are becoming more persistent. Low European gas stocks make the gas market particularly concerning and, she said, the longer the conflict lasts the greater the risk and intensity of indirect and second‑round inflation effects.