Central Banks
ECB’s Schnabel Sees Risk Markets Underestimate Inflation
- Broad disinflation hasn’t started, official says in interview
- Transmission of policy action may be weaker than in the past
Isabel Schnabel at the ECB in Frankfurt.
Photographer: Ben Kilb/BloombergThis article is for subscribers only.
One of the European Central Bank’s most senior officials said that investors risk underestimating the persistence of inflation, and the response needed to bring it under control.
“We are still far away from claiming victory,” Executive Board member Isabel Schnabel said in an interview with Bloomberg, citing the strength of underlying price pressures and faster wage increases. The economy’s reaction to interest-rate increases may prove weaker than in prior episodes, and if that transpires, “we may have to act more forcefully.”