ECB's Schnabel says her view is that some damage done from the Iran war will be hard to reverse
- Seems to be a disconnect between stock market prices and global situation.
- Private credit sector in Europe is too small for now to bring in systemic risk.
- If higher energy costs are passed on to prices or wages increase in response, that is the sign policy has to react.
- If we wait until wages rises materialise, it will be too late.
Context
Schnabel’s comments suggest a cautious stance from the ECB regarding the economic implications of rising energy costs stemming from the Iran conflict. This implies that the central bank may need to act preemptively if wage pressures emerge as a response to increasing costs, indicating a potential shift in policy. Traders should consider the impacts on EUR and fixed income, as market pricing could adjust to reflect any anticipated action from the ECB.
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