ECB's Schnabel Warns Against Overlooking Energy Shock as Credit Dynamics Remain Resilient

European Central Bank Executive Board member Isabel Schnabel warned policymakers cannot simply look through supply-side energy shocks, cautioning that waiting for second-round adjustments risks acting too late. Speaking in Luxembourg, Schnabel defended the ECB's 50 basis points of rate increases since June, which lifted the benchmark deposit rate from 2.0% to 2.5%. She noted that robust credit dynamics suggest financial conditions may not yet be restrictive, and that higher costs pass through to consumers more rapidly during resilient economic growth. Meanwhile, ECB September projections place headline inflation at 3.0% this year and 2.1% in 2028.