ECB aware of inflation concerns; Sees a potential threat to independence – Schnabel – News Couple

ECB aware of inflation concerns; Sees a potential threat to independence – Schnabel

FRANKFURT (Reuters) – The European Central Bank is aware of people’s concerns about rising inflation, but is unlikely to raise interest rates next year, said Isabelle Schnabel, a member of the European Central Bank’s governing body, and that it is concerned that excessive criticism of its policies could jeopardize its independence. at risk. Thursday.

The comments come just days after Germany’s largest tabloid newspaper, Bild, criticized the bank and its head, Christine Lagarde, for being indifferent to the plight of ordinary people. Acknowledging inflation concerns, Schnabel said premature tightening of policy risks halting growth.

“This high inflation is causing increasing concerns among the people, and we take these concerns very seriously,” Schnabel said at a financial conference.

“There are still good reasons to believe that eurozone inflation will clearly decrease over the next year and gradually decline below our 2% target over the medium term, which means that conditions… for a rate hike are completely ruled out. Be satisfied next year,” echoing previous comments from other policy makers.

Eurozone inflation topped 4% last month, double the European Central Bank’s target, and set to rise, angering some in Germany, the eurozone’s largest economy and a long-time critic of the ECB’s too easy policy.

Schnabel said this is a difficult situation for the bank as it continues to provide ample stimulus even as inflation is rising and policy side effects are on the rise.

“This is actually also a threat to our independence because we see that many politicians are now talking and saying: are they still following their mandate or not?” Schnabel added, without specifying any politician by name.

The bank has long argued that most of the factors driving up prices are temporary and related to the reopening of the economy after the pandemic, so once they pass, price growth will drop sharply.

“An early tightening of monetary policy will hurt economic growth and negatively affect employment, including those who remain unemployed,” Schnabel said.

(Reporting by Balaz Kourani; Editing by Keizo Nomiyama, David Gregorio and Aurora Ellis)

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