Schnabel Says Inflation Outlook Hasn't Improved

A RTRS interview with ECB Executive Board member Schnabel saw her note that “in July we decided to raise rates by 50 basis points because we were concerned about the inflation outlook. The concerns we had in July have not been alleviated... I do not think this outlook has changed fundamentally."

• "I would not exclude that, in the short run, inflation is going to increase further. These inflationary pressures are likely to be with us for some time; they won’t vanish quickly. It will take some time until inflation gets back to 2%."
• RTRS flagged that “Schnabel noted that ECB projections have been wrong in recent quarters so actual price growth figures need to be given greater weight in policy decisions.”
• "There is a strong indication that growth is going to slow and I would not rule out that we enter a technical recession, especially if energy supplies from Russia are disrupted further.”
• "Downside risks to economic growth have also increased due to additional supply-side shocks, caused by droughts or the low water levels in major rivers. It seems that, out of the larger euro area countries, Germany is hit the hardest."
• "Even if we entered a recession, it’s quite unlikely that inflationary pressures will abate by themselves. The growth slowdown is then probably not sufficient to dampen inflation."