November 24, 2021

This is the ECB Policy Maker's Comment on Inflation

 It seems that not all European Central Bank (ECB) policymakers think price pressures are only temporary. The proof, Isabel Schnabel is of the view that there is a growing threat of inflation.

Schnabel, who is also a policymaker from Germany, said that the risk of inflation was seen to be increasingly upward, although it would fall below the central bank's target of 2% in the medium term.

His statement follows investor concerns over inflation, which is expected to rise higher in data to be released next week, with price increases likely to soar by nearly 6% in Germany.

When talking about possible sanctions in the wake of Germany’s latest Covid-19 case surge, Schnabel said it would not hinder recovery in the European Zone.

In fact, he also said that it remains reasonable to stop the purchase of the Pandemic Emergency Purchasing Program (PEPP) in March next year as previously stipulated.

The termination of the PEPP is important because it will signal how long the interest rate hike will follow.

Schnabel’s statement indirectly shows it is unlikely that the central bank will consider tightening, although President Christine Lagarde has repeatedly insisted interest rates will remain the same for a longer period.