Published by Global Banking & Finance Review®
Posted on March 27, 2026
2 min readLast updated: March 27, 2026
Add as preferred source on GoogleECB board member Isabel Schnabel urged patience on further rate hikes, emphasizing that current rates and economic conditions differ from past cycles and warrant a data‑driven approach amid an energy shock.
FRANKFURT, March 27 (Reuters) - The European Central Bank should not rush to raise interest rates to combat a surge in inflation and should instead take time to analyse whether the jump is becoming entrenched, board member Isabel Schnabel said on Friday.
The ECB lifted its inflation projections last week and policymakers are now debating whether to raise rates to prevent this rapid price growth from taking hold or whether to look through the shock.
"There is no need to rush into action," Schnabel, considered a hawkish member of the ECB's Governing Council, told a university lecture in Zürich.
"We have the time to look at the data and to analyse what is actually happening, whether there is evidence of second-round effects, how strong the demand environment is, and how likely it is that this inflation shock is becoming entrenched in inflation expectations, and also in wage growth."
Financial markets now expect three interest rate hikes this year from the ECB, with the first coming in April or June, on the premise that policymakers will be keen to move early after being criticised for misjudging the 2021/22 inflation surge.
But Schnabel said the starting point was now different since interest rates are much higher, there is less support from fiscal policy, there is no pent-up demand as in the post-pandemic environment, and the imbalance between supply and demand is not similar.
"We are in a different starting position," Schnabel said. "And I would argue that this gives us the time to analyse carefully."
However, the energy shock does have the potential to lead to lasting inflation and the ECB will act if this proves to be the case, she added.
"If there is a more persistent impact on inflation, monetary policy will need to act, and it will act, and it will act decisively, just as we have done the last time," she said.
(Reporting by Balazs Koranyi;Editing by Andrew Cawthorne and Gareth Jones)
She argues there is time to analyze inflation data to determine if the surge is temporary or becoming entrenched before taking action.
Interest rates are already higher, there is less fiscal policy support, no pent-up demand, and supply-demand imbalances are not the same.
Markets currently expect the first ECB rate hike to occur in April or June.
If inflation shows signs of becoming persistent, the ECB will need to act decisively by changing its monetary policy.
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