Underlying Inflation Looking Sticky, ECB’s Schnabel Says

26 March 2023

By Xavier D’Arcy – FRANKFURT (Econostream) – European Central Bank Executive Board member Isabel Schnabel said on Sunday that although headline inflation was falling in the euro area, core inflation remained sticky.

Speaking at the Chicago Booth Conference on the Global Economy and Financial Stability in Florida, she said that demand was playing a bigger role in Eurozone inflation, as were higher wage demands.

‘Headline inflation has started to decline but core inflation proves sticky’, she said, according to slides published on the ECB’s website. Energy contributions to inflation ‘are falling quickly, while other components are still on the rise’, she said.

There was a ‘[r]otation towards demand-side factors amid [a] stronger-than-expected macroeconomy’, according to the data, she said. The Eurozone was also seeing ‘[s]trong labour markets with rapid pick-up in wage growth.’

She noted that there had been a ‘[s]harp repricing of rate expectations due to persistent inflation and financial instability’ in recent months.