Natural gas prices in Europe have reached their highest level in the past four years, while oil has once again surpassed the $100 mark, highlighting ECB Executive Board member Schnabel's warnings about energy costs.
Speaking at the 2nd European Competitiveness Symposium in Berlin, Schnabel described the latest rise in energy prices as highly concerning. She said the increase was not limited to crude oil prices, also drawing attention to processed products such as diesel and natural gas prices, which have reached high levels.
Schnabel said it was not yet known whether the ECB's rate hike on September 10 would be sufficient. She said future interest-rate decisions would be based on new data.
Euro area inflation rises to 3.3%
The ECB raised its policy rate to 2.50% at its September meeting and revised most of its inflation forecasts upward. Following the decision, expectations of further rate hikes strengthened in the markets.
Annual inflation in the euro area rose to 3.3% in August, driven by the rapid increase in energy costs. This was the highest rate in the past three years.
Gas prices reach their highest level since 2023
Natural gas prices in Europe reached levels not seen since 2023 and began trading at their highest point in four years. Oil prices also rose above the $100 mark again amid conflicts in the Middle East.
European countries' delay in filling their gas storage facilities during the summer, amid expectations that the conflict with Iran would end and prices would fall, was considered a major factor behind the increase.
Storage levels remaining well below the average of previous years led to efforts to accelerate supply operations. Markets are pricing in a probability of more than 60% that the ECB will raise interest rates again at its meeting at the end of October.
