MNI BRIEF: ECB's Schnabel Calls For Gradual Normalisation

Medium-term inflation is increasingly likely to approach the ECB’s 2% target from above, rather than below, Executive Board member Isabel Schnabel said Thursday, amid broadening price pressures and with euro area firms expecting average wage increases of around 3.5%.

The current inflation outlook therefore calls for a gradual normalisation of the ECB’s policy stance, Schnabel said, following the established sequence of steps, beginning with the step-by-step unwinding of net asset purchases.

“The degree to which policy will need to be adjusted over time depends on how the inflation outlook continues to evolve,” Schnabel said, adding that reversing the current exceptional measures “has the potential to mitigate inflationary pressures even without the usual long lag in policy transmission.”