European Central Bank (ECB) Executive Board Member Isabel Schnabel stated on the 1st (local time) that the inflationary impact caused by the war in Iran can no longer be ignored.

Executive Board Member Schnabel pointed out on this day that upward price pressures are spreading beyond the energy sector, and the risk of inflation expectations deviating is growing. He explained that the destruction of energy infrastructure and global supply chains has altered price dynamics in a more persistent manner, warning that a policy response may be necessary even if the conflict ends immediately.

Regarding the future direction of monetary policy, he said regarding the number of rate hikes, "It is still too early to say that it will end after a few hikes," adding, "We need to wait and see how the situation unfolds going forward."

He also emphasized how the current inflation shock differs from past energy crises. Executive Board Member Schnabel pointed out that this shock is increasingly taking on the characteristics of a global demand shock, simultaneously driving up production costs worldwide.