European Central Bank Executive Board member Isabel Schnabel stated to German newspaper Die Zeit that the central bank may need to raise borrowing costs further to curb inflationary pressures.

In the interview published on Wednesday, the German official remarked, "From today's perspective, we will need to continue raising interest rates to bring inflation back to our 2% target in the medium term."

Schnabel, viewed as one of the most hawkish members among ECB policymakers, added, "The extent and timing of further steps will depend on how the conflict, the economy, and inflation evolve."

She noted that while the prospect of a lasting peace agreement between the US and Iran has improved the situation, "a ceasefire is not a reason for monetary policy to let its guard down."

The ECB raised interest rates this month for the first time since 2023 to prevent energy-driven inflation from spreading and becoming entrenched. However, since then, progress in peace negotiations has contributed to a significant decline in oil prices.