European Central Bank (ECB) executive board member Isabel Schnabel said on Thursday, “we must further increase interest rates.”

“In the short term, inflation could rise even further despite interest rate hikes,” she said.

Schnabel went on to say that a “German recession may be unavoidable” while adding that “the euro-zone economy is likely to stagnate not shrink.”

Market reaction

EUR/USD is consolidating the latest leg down to fresh 19-year lows of 0.9809. The pair was last seen trading at 0.9824, down 0.11% on the day.