ECB Can’t Ignore Inflation Driven by Going Green, Schnabel Says
- Europe facing prolonged period of upside price pressures
- Policy will remain highly accommodative, even if QE ends in 3Q
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Europe’s transition toward a greener, less carbon-intense economy is coming at a cost that monetary policy can’t ignore, according to European Central Bank Executive Board member Isabel Schnabel.
The continent faces a “prolonged period” of upside inflation pressure from natural disasters, a reliance on fossil fuels and high demand for scarce resources needed for green technologies, Schnabel said. While the ECB will do its part in responding to these interrelated shocks, fiscal policy also has an important role to play, she said.