ECB Executive Board member says policymakers may need to pay greater attention to actual inflation outcomes in the policymaking process.
The ECB should place greater emphasis on actual inflation outcomes than inflation projections when making monetary policy decisions, Executive Board member Isabel Schnabel said in an interview Thursday, as she appeared to support a rate hike of at least 50 basis points in September.
“Inflation projections play a key role in our monetary policy decisions. But we should not ignore what is happening at the moment,” she said. “This speaks in favour of giving more weight to actual inflation outcomes in monetary policy decisions.” With growth slowing, Europe may be on the brink of a technical recession, Schnabel said, though that may not be enough to bring inflation back to target over the medium term.
“In July we decided on a 50 basis point hike in light of the inflation outlook. At the moment I do not think this outlook has changed fundamentally,” Schnabel said.