ECB Board Member’s Assessment of Euro‑zone Recovery
On Monday, 6 July 2026, ECB Governing Council member Isabel Schnabel addressed an audience in Rome, stating that the euro‑zone economy has not yet returned to its pre‑Iran‑war condition despite the recent decline in oil prices. She emphasized that core inflation remains elevated and that price pressures continue across the region.
Schnabel highlighted several quantitative indicators: gas prices are roughly 40 % above their pre‑war levels, and crack spreads – a measure of refinery profitability – are about twice their pre‑war values. She added that pipeline and supply‑chain pressures remain high.
In addition to energy‑related concerns, Schnabel warned that a current heat‑wave in Europe and the developing Super El Niño weather pattern could push food prices higher. She also noted that rain‑water levels are approaching critical thresholds, underscoring broader vulnerability.
Regarding monetary policy, Schnabel indicated that further policy tightening remains possible, but she suggested that a second interest‑rate increase at the ECB’s July 22‑23 meeting appears less likely.
Comments from Belgian Central Bank Governor
On the same panel, Pierre Wunsch, governor of the National Bank of Belgium, offered a more cautious view, stating that the energy‑price shock linked to the war has largely vanished from market prices. Wunsch said the ECB will provide a projection in September, expressing concern that a rate hike could be implemented too late if the economic trajectory reverses.
---