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2026-05-26 13:07:18
[Schnabel: ECB Should Raise Rates in June Even If Peace Agreement is Reached with Iran] (1) ECB Executive Board member Schnabel said that even if the current peace talks with Iran are ultimately resolved, the ECB should still raise interest rates in June because the conflict has lasted much longer than expected and high energy prices are spreading to a wider part of the economy. (2) The ECB has kept interest rates unchanged for the past year, but discussed raising rates last month because energy costs have pushed inflation far beyond the 2% target. Schnabel said that given the scale and duration of the shock, a rate hike in June is necessary; even if the war ends today, energy infrastructure and global supply chains have suffered significant damage, and monetary policy must respond. The current situation has exceeded the adverse scenario (which assumes a rapid normalization of oil prices). (3) Schnabel also pointed out that some second-round effects may have already begun to appear, with multiple surveys signaling that the shock is increasingly spreading to other parts of the consumer basket.
