ECB's Schnabel (Hawk) says ECB is still in a good place, but Iran war creates upside inflation risks; ECB must monitor persistence of energy price shock

• Small and temporary inflation overshoot is of little relevance if expectations remain anchored.
• Post pandemic lessons suggest ECB must tread careful.
• With inflation projected to be at our target over the medium term and inflation expectations anchored, monetary policy remains in a good place.

Schnabel's remarks suggest a hawkish stance, acknowledging that while inflation is currently manageable and expected to align with the ECB's target, the situation in Iran poses potential upward risks. This indicates the ECB is vigilant and may need to consider adjusting their approach should energy prices become persistently high, affecting the overall monetary policy landscape and interest rates.