ECB director assumes that the ECB economists’ inflation forecast will be revised upwards for next year.
(Photo: Reuters)
Berlin ECB director Isabel Schnabel warns of inflation risks. It is plausible that the inflation rate in the euro area will fall below the ECB’s two percent target in the medium term, she said in an interview with the financial news agency Bloomberg published on the ECB’s website on Tuesday. But uncertainty has increased as to the speed and extent of the decline.
“I don’t think we can really tell what’s going to happen based on the current data,” she added. They assume that the ECB economists’ inflation forecast will be revised upwards for next year. Following the statements, the euro gained slightly against the dollar.
In September they had projected an inflation rate of 1.7 percent for 2022, which is expected to drop to 1.5 percent in 2023. At the next interest rate meeting in mid-December, the ECB will present updated estimates that will also cover the year 2024.
Schnabel’s remarks follow some other, more critical, remarks from within the ranks of the ECB. So far, the central bank has assumed that the rise in inflation that has occurred since this year is a temporary matter that can be traced back to special corona effects and that it is likely to recede again in the coming year. But there are increasing doubts among economists.
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With a view to the tense corona situation in Europe, Schnabel expressed himself cautiously. The increasing number of infections and the corresponding containment measures are likely to dampen economic activity in the short term. The contact-intensive service industry in particular is likely to be affected. “But I don’t think this will ruin the general recovery.”
More: Wieland calls for a turnaround in monetary policy by the ECB: “General price level is rising” – Fratzscher: “It’s not that simple”