Published by Global Banking & Finance Review®
Posted on April 15, 2026
2 min readLast updated: April 15, 2026
Add as preferred source on GoogleECB board member Isabel Schnabel says the bank is in a “relatively favorable” position—monetary policy broadly neutral after achieving 2% inflation before Middle East conflict—allowing it time to assess energy-driven shocks without rushing into tightening.
By Leika Kihara
WASHINGTON, April 15 (Reuters) - The European Central Bank is in a "relatively favorable" position on monetary policy after having successfully brought down inflation to 2% before the war in the Middle East started, ECB board member Isabel Schnabel said on Wednesday.
"We have a monetary policy stance that is broadly neutral and this means we can afford to take the time that is needed to analyze the character of this shock. We do not need to rush into action," she said during a panel at the Institute of International Finance in Washington.
The current energy shock is particularly problematic because it has occurred after a very long period of above-target inflation, keeping memories of high inflation very fresh in the public's mind and inflation expectations more fragile, she said.
As a net energy importer, however, the euro zone economy may weaken from rising fuel prices, making it harder for firms to pass through costs or for workers to negotiate higher pay, Schnabel added.
"We have to weigh our policy decisions very carefully and see which ... prevails. We have to stay data-dependent. We have to think very carefully which data can give us information that inflation could become entrenched, and there could be second-round effects," she said.
But the ECB must also avoid imposing an "unnecessary cost" on the economy through premature monetary tightening, she said.
(Reporting by Leika Kihara; Editing by Paul Simao)
The ECB's current monetary policy stance is broadly neutral, allowing them to take time to analyze economic shocks without rushing policy changes.
Inflation was successfully brought down to 2% before the Middle East crisis, but recent energy shocks and memories of high inflation have made expectations more fragile.
As a net energy importer, the euro zone may see economic weakening from rising fuel prices, making it harder for firms to pass on costs or for workers to negotiate higher wages.
The ECB aims to avoid unnecessary economic costs by not tightening policy prematurely and remains data-dependent, weighing new information carefully before acting.
Isabel Schnabel is an ECB board member who emphasized the importance of a cautious, data-driven approach to policy amid current economic uncertainties.
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