ECB’s Schnabel: ‘Inflation Expectations Remain Fragile and Need to Be Monitored’

26 June 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member said on Thursday that inflation expectations were weak and had to be monitored by the ECB.

At a financial market retreat of the Economic Council of German political party CDU, held in Frankfurt, Schnabel said that ‘inflation expectations remain fragile and need to be monitored’, according to slides provided by the ECB.

The outlook for economic growth was ‘broadly stable’ despite trade tensions and medium-term inflation was ‘near 2%’, she said.

The projected decline in inflation was expected to be ‘temporary before returning to target over the medium-term’, she said.

However, Schnabel said that energy prices and the exchange rate, which have driven inflation in the latest projections, could easily move in both directions.

‘Tariffs can be amplified through global value chains posing upside risks to inflation’, she said.

There were risks of supply chain disruptions and the diversion of goods from China to the EU was going to be ‘limited’, she said.

‘Monetary policy cycle is coming to an end as medium-term inflation stabilises at target’, she said.