Immediately after the end of the European Central Bank’s last monetary policy meeting of the year, Isabel Schnabel, a member of the bank’s executive board, said that the interest rate will have to move into “restrictive territory” for inflation to return to the target level of 2%, Bloomberg writes.

Speaking about the next 4 ECB interest rate hikes, Schnabel echoed the words of the bank’s head Christine Lagarde, who said that rate hikes will continue “over a period of time” to bring inflation back to 2%.

Thus, the final rate will in any case be higher than many market participants expected, and therefore reaching a consensus on the bank’s next steps will not get any easier. The German policymaker said that the ECB underestimated the persistence of inflation and initially did not take signs of higher inflation seriously enough.

Schnabel noted that many had previously simply underestimated the rise in prices as pandemic measures were eased: “They thought supply chain disruptions would be fixed more quickly. But it took much longer than expected.”

The ECB’s current forecasts suggest inflation will rise markedly above 2% over an extended period that is likely to last until 2025.