European Central Bank Executive Board member Isabel Schnabel has indicated that while peace efforts in the Middle East have led to a rapid decline in energy prices, the global situation has not yet returned to its pre-conflict state.

In remarks made during a panel discussion in Rome on Monday, the official stated, "Does the fall in oil prices mean we are back to the pre-war situation? I don't think so."

"Peace agreements remain fragile. Markets continue to point to higher oil prices over a longer horizon. Gas prices are still about 40% higher than before the war."

She reiterated that the shock triggered by the US-Iran conflict cannot be simply ignored, warning that pressures on pipelines and supply chains remain elevated.

Officials like Schnabel maintain that price pressures are still being transmitted and threaten to push up wages as well as food and service costs in the coming months.

However, with oil prices falling and inflation easing faster than anticipated, doubts have emerged over whether the ECB will continue raising interest rates beyond the hike implemented in June.

Following hints from some policymakers that the worst shocks may have passed, traders have scaled back their bets on further policy tightening this year.

Belgian National Bank Governor Pierre Wunsch, speaking at the same event, reiterated that while he does not rule out another rate hike, the backdrop has clearly become calmer.

"The shock seems to have faded, and according to market conditions, oil and gas prices would return to their initial levels relatively quickly, perhaps even below them," he said.

"If the source of the shock disappears before generating significant second-round effects—and so far we haven't seen much of that, especially as wage developments appear quite moderate—this would guide the monetary policy response. Perhaps we need to do more, but it doesn't require significant tightening."

In contrast, Schnabel cautioned about future dangers.

"Energy and inventories will need to be refilled," she noted.

"While eurozone headline inflation has retreated from its peak, core inflation has responded much less and its momentum remains strong."

Schnabel also warned of new shocks, including heatwaves in Europe, low water levels in the Rhine River, and the artificial intelligence investment boom, which is "supporting global demand and adding to inflationary pressures."