MNI BRIEF: Stimulus Reduction Must Be Proportionate - Elderson

The pace at which the European Central Bank gradually normalises monetary policy will be determined by its bedrock commitment to proportionality, Executive Board member Frank Elderson said Thursday, as he ruled out the prospect of stagflation.

“Any adjustments to the key ECB interest rates will take place some time after the end of our net asset purchases and will be gradual and based on the incoming data,” Elderson said. “Both the timing and the pace will be proportionate to the evolution of the inflation outlook in relation to our price stability objective.”

High levels of global uncertainty -- including that caused by war in Ukraine -- make accurate forecasting difficult and present headwinds to growth, he said, adding that although inflation has continued to surprise to the upside, stagflation is not currently foreseen.