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Ekonomické zprávy
17.11.2021

ECB's board member Schnabel: Fears of return of stagflation appear to be unfounded

In today's speech, the ECB's board member Isabel Schnabel stated that, in her opinion, the fears of a return of stagflation appeared to be unfounded. She also added that reflation, not stagflation, remained the defining theme of our times.

According to Schnabel, more persistent supply bottlenecks imply that part of the increase in production and demand, which was forecast for this year and next, may only materialize later on. But, she warned, that there were concerns that the slowdown might be more abrupt and more enduring. Economic activity globally and in the eurozone has started to moderate, she said.

Schnabel also urged the monetary policymakers to focus on the entire range of possible outcomes to ensure that they will be able to deliver on their mandate. This, in her opinion, means avoiding the mistake of premature tightening of monetary policy in response to a temporary and possibly short-lived inflation spike. On the other hand, she added, it means keeping a watchful eye on the upside risks to inflation that financial markets currently anticipate and retain optionality to be able to act if needed. Schnabel also noted that their analysis suggests that inflation concerns were largely unwarranted.

The ECB's official said that the ECB's policymakers were unanimous in acknowledging that higher energy costs and supply bottlenecks were among major drivers of the spike in inflation, but noted that there was less agreement on the persistence of many of these price pressures, and their meaning for the appropriate response of monetary policy.

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