Schnabel Says ECB Stimulus Must Reflect More Protracted Pandemic

Following is the transcript of an interview with European Central Bank Executive Board member Isabel Schnabel conducted Nov. 30. Click here to read the Bloomberg story.

At the moment we’re seeing two countervailing forces. On the one hand, there are rising infection numbers and renewed lockdowns. This has tilted our outlook to the downside. On the other hand, there’s positive news on the vaccine. This shows that there is light at the end of the tunnel. But of course, we still have to get through the tunnel, so that’s the challenge we’re facing. If we look at the data, we have seen a surprisingly strong rebound in the third quarter, but we also see now that the fourth quarter is very likely to show a drop in GDP, even if the situation is not as severe as in the spring. It seems likely that this weakening is going to stretch into the next year, and also that the inflation outlook may be subdued for some time. We continue to work with scenarios, and one of the main driving factors is how quickly the medical solution will come about. It’s likely that the overall recovery will be bumpy. We may see renewed lockdowns until widespread immunity has been achieved.