(Finance) – In the euro area there are “upside risks on inflation outlook”, due to both economic factors caused by the lockdown crisis and anti Covid measures, and a “structural developments”. She affirmed it Isabel Schnabelmember of the Executive Committee of the ECB speaking at a conference on finance and inflation prospects in the euro area, organized by the parliamentary group of the SPD.
It will serve “careful monitoring “ of these risks and “if necessary to ensure price stability, monetary policy countermeasures,” he said.
So far, in the euro area, this has not been recognized “no indication of unanchored inflation expectations” from the ECB’s price stability objective – the latter point to inflation at 2% in the medium term – nor of the triggering of “a price-wage spiral”.
Interviewed in the last few hours by the Financial Times, Schnabel said that it is time for the ECB to “start thinking about a normalization of monetary policy“, as the (nasty) surprises that inflation has reserved in recent months suggest it will stay high longer than expected. According to Schnabel in the euro area,” it is becoming increasingly likely that inflation will stabilize around our target. 2% over the medium term. This means that we must start thinking about a gradual one normalization of our policy. There are two types of risks on this: to act too soon and to act too late, we must find the right balance “.
The German economist also provided a good number of insights on several key aspects, that monetary policy is now called upon to address.
Speaking of how long the renewal operations of the gigantic amount of securities accumulated in the past years and in this recent crisis will last, Schnabel reiterated that already in December it was decided to extend at least until the end 2024 the renewal of the titles accumulated with Pepp and that to date no decisions have been taken on the renewal of the portfolio of the mega App program.