Key Quotes From Sunday’s German Media Interview With ECB’s Schnabel

19 January 2025

Key Quotes From Sunday’s German Media Interview With ECB’s Schnabel
Isabel Schnabel, Executive Board member of the European Central Bank, at the ECB Money Markets Conference 2024 in Frankfurt on November 7, 2024. Photo by Adrian Petty / ECB under CC BY-NC-ND 2.0.

By David Barwick – FRANKFURT (Econostream) – Following are the key quotes from European Central Bank Executive Board member Isabel Schnabel interview on Sunday with German news portal Finanztip:

 

  • ‘In fact, inflation in Germany in December was somewhat higher than expected, and it is true that inflation could remain high in January as well, because we have now had an increase in CO2 prices, insurance has risen quite a bit, and yet we are still optimistic. So first of all, we are looking at the euro area as a whole, and in the euro area as a whole, inflation was ... 2.4% in December, and that was also within the range of what we had expected. And that is why we believe that we are still on the right track and hope that we will return to our inflation target of 2.0% this year. And that depends very much on what happens with services inflation. ... That is the part of inflation that has proven to be particularly stubborn. ... and what we are predicting is that it will go down significantly this year. And that depends very much on how wages develop. Wages have risen sharply, but we are now assuming, because the economy has weakened and inflation is falling, that wages will also grow more slowly, and that should then lead to services inflation also falling, and our overall inflation then moving towards 2%. And as I said, we are relatively optimistic. If inflation falls as quickly as we expect, then we also believe that we can lower interest rates further. However, it is also the case that now, after these sharp interest rate cuts that we have already had in recent months, we are getting closer and closer to the point where we have to take a closer look to see whether and how much further we can lower interest rates.'

 

  • ‘In fact, this increase in inflation in recent months had a lot to do with statistical effects. ... But that has no effect on this general disinflationary trend.’

 

  • ‘I also tend to assume that in thinking about the risks to inflation, then I would tend to say that there are still some risks that suggest that inflation could be higher. But at the moment we have the feeling that everything is going in the right direction, but we are watching everything closely and will react if necessary. And of course we have the necessary ammunition to do so.’

 

  • ‘Of course, it must be said that tariffs have played a prominent role in Donald Trump's communications. And that is why it is indeed very likely that a trade conflict will arise. It is unclear exactly what it will look like, and of course what it means for us depends on that. … What can be said is that tariffs in general lead to a loss of global prosperity.’