# ECB’s Schnabel Says Policy Must Respond to Inflation Effects of Overlapping Shocks

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/27415
Published: 2026-10-07T12:34:48.000Z
Updated: 2026-10-07T12:34:48.000Z
Section: Regulation

> The ECB has raised its deposit facility rate from 2% to 2.5% since June as policymakers assess inflation risks from multiple economic shocks.

European Central Bank Executive Board member Isabel Schnabel said policymakers must judge overlapping shocks by their effect on future inflation as the ECB assesses how to maintain price stability.

“What matters instead is the effect of the shock … on the projected path of inflation over the relevant policy horizon,” Schnabel said in remarks delivered in Luxembourg on Sept. 30.

The ECB has raised its key interest rates by 50 basis points since June, lifting its deposit facility rate from 2% to 2.5%.

Schnabel said the ECB’s policy assessment weighs the inflation outlook and its risks, underlying inflation and the strength of monetary-policy transmission. A supply shock can require tighter policy when it is large or persistent enough to push projected inflation above target.

Her remarks addressed overlapping effects from the Middle East conflict, artificial-intelligence investment, tariffs and higher defense spending. The assessment focuses on how those forces affect inflation over the period relevant to monetary-policy decisions.

Schnabel also cautioned against relying mechanically on headline inflation forecasts when energy prices are volatile.

“Inflation is back and weighing once again on people’s everyday lives,” Schnabel said.