European Central Bank (ECB) Executive Board member Isabel Schnabel stated that the ECB should raise interest rates in June, even if the ongoing peace negotiations with Iran are successfully concluded. The duration of the current conflict has far exceeded expectations, and high energy prices have already spread throughout the broader economy. Over the past year, the ECB has consistently kept interest rates unchanged. However, influenced by a significant surge in energy prices, the inflation rate has remained well above the 2% policy target. The central bank initiated discussions on a rate hike last month, with several policy officials signaling readiness for action. In an interview with media, Schnabel remarked, "In my view, given the scale and persistence of the current shock, continuing to do nothing is no longer feasible. Based on the current situation, a rate hike in June is necessary." Although the United States has indicated progress in the Iran peace talks, Schnabel, seen as a leading candidate to succeed the ECB presidency next year, believes the central bank now has no room to retreat. The damage to energy infrastructure and persistently high energy prices are continuously transmitting across various sectors of the economy.
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