(Telestock) – Disinflation in the Eurozone is proceeding rapidlyHe confirmed it today Isabel Schnabelmember of the Governing Council of the ECB, speaking at an event in Estonia.
“Inflation “The data released yesterday suggest that inflation fell further in some parts of the euro area in August,” Schabel said, speaking of “positive developments” that “reflect” the slowdown in energy and food prices and also “the impact of our restrictive monetary policy.”
The member of the Board of the Frankfurt Institute then recalled that in services “disinflation is effectively at a standstill”, but the persistent pressures on prices in the services sector “are a global phenomenon”.
“To assess whether current monetary and financial conditions will ensure a timely return of inflation to target, policy makers need to take a position on the likely future path,” Schnabel stressed, indicating “Inflation is expected to fall to 2.2% in 2025 and 1.9% in 2026″ even if “the last mile of disinflation will be bumpy.”
“Managing inflation is particularly challenging in an era of transformation,” acknowledged the banker, recalling the “fundamental changes in labor and energy markets and the reorganization of global supply chains”.
“The Central banks must weigh the risks and focus on those deemed most damaging to achieving their mandate,” Schnabel said, noting that “the monetary policy should stay focused on the timely return of inflation to target.”
Schabel warned, however, that “on the one hand, the monetary policy must avoid unnecessary sufferingon the other hand it must also avoid overreacting to volatile financial market expectations. Central bank actions should be guided by the evolution of their assessment of the inflation and growth outlook.”