Isabel Schnabel, a member of the European Central Bank's Executive Board, has emphasized the necessity of a rate hike in June, regardless of potential outcomes from U.S.-Iran peace talks. Schnabel highlighted that the prolonged energy shock has significantly impacted the eurozone, with inflation reaching 3% and further risks anticipated. She noted that high energy costs are causing "second-round effects," leading to persistent inflationary pressures across various sectors. Schnabel pointed out that the ECB's baseline forecast already includes two rate hikes, suggesting that a single increase may not suffice to meet inflation targets. Market expectations align with this, anticipating two future rate hikes and a 50% chance of a third within the next year. Despite these projections, the ECB plans to remain flexible, adjusting policies based on evolving data. Schnabel also warned of potential economic growth challenges due to sustained high energy prices, which could exacerbate the dual pressures of slowing growth and rising inflation.