ECB board member Isabel Schnabel identified three factors that should guide decisions on whether further interest-rate hikes are needed: the effect of persistent energy prices on inflation expectations, the resilience of economic demand and the impact of rising global borrowing costs. The ECB has raised rates twice this year after an energy-price surge pushed inflation well above its 2% target, while markets see as many as four additional increases over the next year. Schnabel, an outspoken policy hawk, said longer-term inflation expectations remain around 2%, partly reflecting the ECB’s rate increases. She added that monetary policy could tolerate a more gradual return to target if expectations remain anchored and the ECB maintains a record of delivering on its inflation target. However, strong credit dynamics suggest rates may not yet be restricting the economy, while higher borrowing costs could also weaken growth more than the ECB currently expects.