FRANKFURT (Reuters) – The European Central Bank may need to raise interest rates if high energy prices risk pushing overall price growth expectations above the bank’s 2% target, ECB board member Isabel Schnabel said on Wednesday.
“Raising rates would not lower energy prices,” Schnabel said in a Twitter Q&A. “But if high current inflation threatens to lead to a de-anchoring of inflation expectations, we may still need to respond, as our mandate is to preserve price stability.”
“An extended period of high energy price inflation may lead to expectations of higher inflation in the future,” Schnabel added.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
