ECB Executive Board member Isabelle Schnabel said that due to the protracted conflict in the Middle East and strong economic performance in the Eurozone, inflation faces upward risks, and interest rates must continue to rise. The German official said consumer prices may rise above 2% “for a long time” due to high energy costs. She warned that if they wait until inflation is transmitted to the wage level before taking action, policymakers will fall into a passive situation where they “lag behind the situation.” In an interview with the media on Tuesday, Schnabel said, “According to the current policy interest rate level, it is difficult for inflation to fall back to the target level in the medium term, so it is necessary to further tighten monetary policy. Especially in the current environment where aggregate demand is resilient, it is necessary to prevent the effects of the second round of inflation as soon as possible; if action lags behind, it is necessary to implement more intense austerity.”

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