ECB’s Schnabel: Tariffs to Be Disinflationary in Short Term, But Upside Risks in Medium Term

20 May 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Executive Board member Isabel Schnabel said on Tuesday that US tariffs could dampen inflation in the short term but trigger a surge in prices in the medium term.

In her X account, Schnabel said that ‘[d]isinflation is on track, but new shocks are posing new challenges.’

Tariffs could be disinflationary in the short term but there were upside risks in the medium term, she said.

‘Therefore, we should keep a steady hand, as I argued in a recent speech’, she said.

The ECB had recently understood that it could not ‘look through’ persistent supply-side shocks that jeopardised the anchoring of inflation expectations, according to Schnabel.

‘When the inflation regime changes, we must be ready to respond swiftly’, she said.

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