MNI BRIEF: Return To ECB's 2% Target More Likely–Schnabel

MNI (LONDON) - A sustainable decline in inflation back to the European Central Bank's 2% target “is becoming more likely,” despite persistently high services inflation and robust wage growth, Executive Board member Isabel Schnabel said in a speech on Wednesday.

The euro area economy is stagnating, and surveys among firms suggest growth will remain subdued for the rest of the year, Schnabel noted, citing factors including the pandemic, the war in Ukraine, and monetary tightening. (See MNI SOURCES: Chances Of October ECB Cut At Least 50-50)

However aggregate growth figures hide “significant heterogeneity” within the Eurozone, which has widened since interest rates began to rise, she said, adding that, excluding Germany, growth in the euro area would have shown remarkable resilience. (See MNI INTERVIEW: VW Crisis Should Be Wake-Up Call - IWK's Demary)