ECB’s Schnabel: Risk of Serious Undershooting of Inflation Target 'Small'

30 October 2024

ECB’s Schnabel: Risk of Serious Undershooting of Inflation Target 'Small'
Isabel Schnabel, member of the European Central Bank Executive Board, at the ECB's Governing Council meeting in Ljubljana on October 17, 2024. Photo: Andrej Hanžekovič/ECB.

By David Barwick – FRANKFURT (Econostream) – The risk of the European Central Bank seriously undershooting its inflation target is still small, ECB Executive Board member Isabel Schnabel said Wednesday.

 

Speaking at the 1st CEPR Frankfurt Hub International Conference in Frankfurt, Schnabel, according to the slides made available by the ECB, said, ‘Disinflation remains on track, which allowed us to lower rates further in October, but the fight against inflation is not yet won’.

 

‘A gradual approach to removing restriction remains appropriate’, she said. In this context, she said that the ‘[r]isk of meaningful and persistent undershooting of inflation target remains small’ and that ‘[p]rojected growth in 2025 close to potential, no need to go below neutral’.

 

The neutral rate was very uncertain, but when the ECB ‘soon’ nears neutral territory, it will have to decide how restrictive policy is given the outlook and available information, she said.