ECB director Schnabel fears higher inflation in the medium term
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According to ECB Director Isabel Schnabel, the move to sustainable energy poses a risk of higher inflation in the medium term. This might cause the ECB to abandon its previous monetary policy. For 2022, the central bank expects inflation of 3.2 percent.
SRising energy prices might force the European Central Bank to take action once morest inflation, according to Director Isabel Schnabel. The turn to green energy sources carries the risk of higher inflation in the medium term, Schnabel said in a speech on Saturday. If energy becomes more expensive, this might cause the ECB to abandon its previous monetary policy.
ECB chief economist Philip Lane recently pointed out this problem: “The fact that energy prices have risen so sharply is a big problem,” he told Irish broadcaster RTE. “We will keep an eye on this, it is a very important point.” Although inflation will fall this year, it will remain above the European Central Bank’s long-term target of two percent, Lane predicted.
Inflation in the euro area rose to another record high in December. Goods and services cost an average of 5.0 percent more than a year earlier, as the Eurostat statistics office announced on Friday for its first estimate. This is the highest value since the statistics began in 1997.
The ECB recently raised its inflation forecast for the new year to 3.2 percent, almost doubling it. Warnings of prolonged high inflation have been voiced in the ranks of the euro guardians. The rising prices are increasing the pressure on the European Central Bank, whose loose monetary policy has recently come under increasing criticism.
The ECB has kept interest rates extremely low so far in order to keep the economy going in the corona pandemic. On the one hand, it would have to do something regarding rising inflation. On the other hand, the appearance of the omicron variant of the coronavirus has forced a rethinking of all decisions that might slow economic growth.
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