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MNI BRIEF: ECB Will Use New Policy Tools If Needed

(MNI) Frankfurt

The European Central Bank will use "new and untested instruments [...] if needed and as appropriate," to reach its price stability target of 2% inflation, Executive Board member Isabel Schnabel said in a speech Wednesday, with monetary policymakers ready to react "especially forcefully or persistently to disinflationary shocks" when policy rates are close to the lower bound.

Schabel said the ECB review had found no compelling evidence that inflation has systematically become less responsive to economic activity, but that the ECB Governing Council would need to see higher inflation prospects visibly reflected in actual underlying inflation dynamics before a more fundamental reassessment of the medium-term inflation outlook was warranted.

Schnabel reiterated that the ECB's symmetrical approach to meeting its price stability aim could imply a "transitory period in which inflation is moderately above target.

MNI Frankfurt Bureau | +49-69-720-146 |
MNI Frankfurt Bureau | +49-69-720-146 |

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