Schnabel (ECB): "We are not out of the woods yet" in the fight against inflation
The European Central Bank (ECB) said the latest data confirmed fears that inflation could accelerate again and that the "initial phase" of easing price growth would be the most difficult. Find more news on our website.
The ECB has kept interest rates at record levels since September, but the debate over whether to ease monetary policy has intensified. Markets believe the central bank will make its first rate cut in the spring, given the weakening pressures on economic growth and prices.
However, Isabel Schnabel points out some worrisome signs of the beginning of a new "critical" phase of disinflation and warns against cutting interest rates too quickly.
He said in a statement that "expectations for the selling price of services have risen for several consecutive months."
While a resurgence in inflation is not the ECB's baseline scenario, the data raise concerns of further difficulties in the supply chain, especially with shipping disruptions in the Red Sea.
Isabel Schnabel said, "I would say that we are now entering a critical stage where monetary policy coordination and transmission will be particularly important when it comes to including a second round of effects."
"We have made considerable progress, and that is good news," she added. "But we are not out of the woods yet."
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