What Schnabel said in Berlin

Speaking Monday in Berlin alongside German Economy minister Katherina Reiche, Executive Board member Isabel Schnabel said the latest shifts in energy prices are "quite concerning." She stressed "Its not just oil, but also diesel," and noted that "Refining capacities have reduced drastically and can't be rebuilt quickly."

Gas, inventories and global competition

Schnabel pointed to gas as another pressure point, saying "There is an issue of low storages in Europe and of competition with Asia for LNG supplies." The ECB has warned that natural-gas costs could climb if supply is disrupted again or if an unusually cold winter meets already low inventories. It also highlighted that European gas prices have almost tripled this year, and that the bloc has limited time to rebuild stocks before winter.

Policy stance and timing

Last week's rate increase was the second since the Iran war drove energy prices higher, and officials cautioned that inflation risks are skewed upward. They warned the energy shock could intensify further and push prices and wages above what is currently expected. While the ECB is staying data-driven rather than pre-committing, people familiar with officials' thinking told Bloomberg last week that more tightening is anticipated. The December meeting is viewed as the leading candidate for another quarter-point rise, with October still possible.

How the ECB is weighing the next move

Schnabel described the latest rate step as "kind of a logical response to the expected deviation of inflation from our target over the medium term in the absence of appropriate monetary-policy action." She added, "Whether that is enough, we need to see," emphasizing the meeting-by-meeting approach and attention to core inflation and non-energy goods and services. "The next decisions are going to be taken on the basis on incoming data."

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If you're watching your own portfolio, the signals to track are straightforward: Europe's energy prices and storage levels, and what the ECB decides in October and December.

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