ECB’s Schnabel: If There Is a Recession, It Won’t Be Sufficient to Deal with Inflation

10 November 2022

By David Barwick – FRANKFURT (Econostream) – The European Central Bank cannot count on a possible euro area recession to do its job with respect to high inflation, according to ECB Executive Board member Isabel Schnabel on Thursday.

In remarks during a panel discussion in Slovenia, Schnabel noted that the ECB would be updating its staff macroeconomic projections next month. ‘I think it’s clear that the risk of a recession has gone up, given the data that we have seen’, she said. ‘I cannot tell you where the projection will be precisely, but there is an impression that if there is a recession, this recession is probably not going to be very deep and very prolonged, which matters for us’ in terms of inflation.

‘And if the recession is not very deep and not very long, the recession as such will not be sufficient’ to suppress price pressures, she said.

‘If that is the case, we would get into a situation where we have to do more’, she added.