European Central Bank Executive Board member Isabel Schnabel said on Thursday that this monetary-policy cycle is coming to an end as medium-term inflation is stabilising around the 2% target.
The official noted that the growth outlook is broadly stable despite the trade conflict, and that core inflation in the euro area remains elevated but is on a good path.
Schnabel also said financing conditions are no longer restrictive, and private consumption is supporting growth. Defence and infrastructure spending, she added, help to counteract the effects of tariffs.
In addition, the official highlighted that wage growth in the region is expected to slow further, while energy prices and the euro could move in either direction.
Schnabel also noted that she expects only limited trade diversion from China to the European Union and emphasised that she believes that the ECB is in a good place in terms of monetary policy.
Regarding the Eurozone's currency, the official said that the euro’s global role is strong and could strengthen further. The strong euro exchange rate, she added, is being driven by a positive confidence shock in the EU, not by interest rate differentials.