The European Central Bank (ECB) remains on a restrictive course. Director Isabel Schnabel signaled further interest rate hikes and warned against premature all-clear for monetary policy. The reason is the cautious easing of the Iran conflict, which, according to Schnabel, does not mean a fundamental all-clear, even though energy prices have fallen due to the provisional peace agreement.
Schnabel defended the ECB’s latest rate hike, which raised key interest rates for the first time in nearly three years in June. The step was correct, even with a rapid normalization of oil prices. Without tightening, inflation would be above the ECB’s two percent target in the medium term, she said.
So far, there is “no indication that wage growth is accelerating or that people expect higher inflation in the long term,” the ECB director said. “But the memory of the high inflation phase is still fresh, so one must assume that expectations today react more strongly to an increase in inflation.”
Source: www.tagesspiegel.de
