ECB Must Be ‘Vigilant’ to Upside Price Risks, Schnabel Says

The European Central Bank must keep a close eye on upside inflation risks stemming from geopolitical events like the war in Iran, though it doesn’t have to react as long as price growth remains reasonably close to target, Executive Board member Isabel Schnabel said.

With inflation projected to meet the 2% goal over the medium term and consumer expectations anchored, “monetary policy remains in a good place,” Schnabel said Friday in New York. But the ECB “cannot be complacent,” she added, with the Middle East escalation making the price outlook more uncertain.