Updated
Updated · investinglive.com · Jul 6
Schnabel Says Gas 40% Above Pre-War Levels Keep ECB Hike Option Alive
Updated
Updated · investinglive.com · Jul 6

Schnabel Says Gas 40% Above Pre-War Levels Keep ECB Hike Option Alive

3 articles · Updated · investinglive.com · Jul 6

Summary

  • Gas prices still about 40% above pre-war levels led Isabel Schnabel to argue the euro zone has not returned to normal despite the recent drop in oil prices.
  • Crack spreads at roughly twice pre-war levels, sticky core inflation and lingering pipeline and supply-chain strains underpin her warning that inflation risks remain alive.
  • July 22-23 is still nominally in play for another ECB rate hike, but markets have increasingly scaled back tightening bets as energy prices eased and some policymakers turned less hawkish.
  • Pierre Wunsch struck that softer note on the same Rome panel, saying the war-driven energy shock has largely faded from market pricing and oil and gas could return to or fall below pre-war levels.
  • The split highlights a live Governing Council debate over whether easing energy markets justify a pause or whether heat, El Nino and low Rhine water levels could revive price pressure.

Insights

As stagflation looms, can the ECB's interest rate hikes tame inflation without triggering a severe recession?
With supply shocks now common, is the ECB’s rigid 2% inflation target still the right goal for Europe?
Is the ECB's hawkish stance on inflation undermining Europe's urgent green transition and defense spending goals?