According to Isabel Schnabel, why doesn’t the recent peace deal restore the pre-war economic situation despite falling oil prices?

Schnabel states that although oil prices have declined rapidly due to Middle East peace efforts, the world is not back to the pre-war situation because 'the peace deal is still fragile', markets still anticipate higher oil prices over longer horizons, and gas prices remain 'around 40% higher than before the war'; she also emphasizes that the US-Iran conflict shock cannot be ignored, with ongoing pipeline and supply-chain pressures, and that while headline inflation has fallen, core inflation 'has reacted much less and its momentum remains strong'.

What is the divergence between Schnabel’s and Wunsch’s views on the ECB’s need for further interest rate hikes?

Schnabel cautions that energy and inventory replenishment needs persist, core inflation remains stubbornly strong, and price pressures—including on wages, food, and services—are still unfolding; in contrast, Wunsch observes that 'the shock has disappeared' and that markets expect oil and gas prices to return to, or even fall below, pre-shock levels soon, and—since second-round effects like wage increases 'seem to be quite benign'—he suggests any needed monetary-policy reaction would not require 'significant' tightening.

Peace Deal Doesn’t Restore Pre-War Situation, ECB’s Schnabel Says

Jul 6, 2026

ECB’s Schnabel warns Middle East peace deals haven’t normalized energy prices due to fragile markets and supply chains. Officials caution inflation risks persist despite oil price drops due to ongoing energy and food cost concerns.

bloomberg

2026-07-06

Peace Deal Doesn’t Restore Pre-War Situation, ECB’s Schnabel Says

2026-07-06

ECB's Schnabel Says Iran Shock Persists Despite Oil Price Drop

Peace Deal Doesn’t Restore Pre-War Situation, ECB’s Schnabel Says

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