Isabel Schnabel from the ECB Governing Council states that the economy could respond more than expected to the global rise in yields, which would reduce price pressures and delay the return of inflation to 2%.
ECB Governing Council member Isabel Schnabel noted on Wednesday that the recent rise in global yields could have a greater effect on the economy than estimated, which in turn would curb inflationary pressures. The information, reported by fxstreet.es, indicates that this mechanism could delay the return of inflation to the 2% target.
Schnabel explained that high costs are passed on to consumers more quickly when the economy shows resilience. In this regard, she pointed out that the strength of credit dynamics indicates that financial conditions are still not restrictive.
“High costs are passed on to consumers more quickly when the economy is resilient”
The ECB council member added that the economy could react more significantly to the rise in global yields than previously assumed, which would help moderate price tensions. However, she warned that inflation may return to the target more gradually if expectations remain anchored.
These statements come in a context where markets are monitoring inflation data and the ECB's monetary policy decisions, which meets eight times a year to set interest rates in the eurozone.
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