There is a risk that markets will underestimate inflation. To sound the alarm is Isabel Schnabel member of the ECB directorate. “We are still far from being able to claim victory,” she said in an interview, according to Bloomberg reports. The economy’s reaction to interest rate hikes may prove weaker than previously, and if that transpires, “we may have to act more forcefully,” she said.
Words at odds with the statements released yesterday by Fabio Panetta which, however, had slowed down, evoking for monetary policy “the risk of excessive restriction”.
ANSA agency
European Central Bank Executive Board member warns of risks of excessive tightening. Right to offset wages from inflation (ANSA)
Given the current level and “the level and persistence of underlying inflation, a 50 basis point rate hike” for March “is necessary under virtually all plausible scenarios in order to bring inflation back to 2 %”. So Isabel Schnabel, member of the ECB directorate, in an interview, according to reports from Bloomberg. Schnabel points out that “a broad disinflation process has not even begun in the euro area”.
The European Central Bank will probably raise interest rates to their maximum level by September and then keep them there until at least next year to ensure inflation returns to the 2% target. Governing council member Francois Villeroy de Galhau said at a conference in Paris, Bloomberg reports. “It is our duty to remember that the battle against inflation will only be won through perseverance, keeping interest rates high as long as necessary – Villeroy clarified – We must be careful not to declare victory too quickly”.
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