ECB Executive Board member Yves Mersch said today that inflation will rise only gradually. He said in Sofia “overall, the underlying strength in the euro area economy continues to support our confidence that inflation will converge towards our aim over the medium term.” But he added that ” inflation convergence will likely proceed only gradually, and remains contingent on a highly accommodative monetary policy stance.”

Also, Mersch added that “the transition towards policy normalization will begin once the Governing Council assesses there has been sustained adjustment in the path of inflation.”

Separately, ECB Governing Council member Benoit Coeure said Eurozone growth isn’t just recovery but an expansion. He added that there is solid and broad based expansion in the region.

Comments from both are strikingly similar to President Mario Draghi’s yesterday.

In a speech, ECB President Christine Lagarde said that the central bank focus on “medium term, not on current inflation numbers”. “When inflation pressure is expected to fade – as is the case today – it does not make sense to react by tightening policy,” she added. “The tightening would not affect the economy until after the shock has already passed.”

Lagarde also said, “supply shock” will tend to “push up inflation and depress output. In this case, “tighter monetary policy would only exacerbate the contractionary effect on the economy.” The Eurozone is facing a “mixture of shocks”, partly related to catch-up demand but has a “strong supply-driven element”. “Tightening policy prematurely would only make this squeeze on household incomes worse.”

“The conditions to raise rates are very unlikely to be satisfied next year,” she said. “Moreover, even after the expected end of the pandemic emergency, it will still be important for monetary policy – including the appropriate calibration of asset purchases – to support the recovery and the sustainable return of inflation to our target of 2%.”

Full speech here.

In an interview with Nikkei, ECB Executive Board member Isabel Schnabel indicated that a rate cut in June “may be appropriate” based on current data. However, she noted that another cut in July “does not seem warranted.” Schnabel emphasized that the outlook beyond June is “much more uncertain,” pointing out that the “last mile” of disinflation is the “most difficult.”

Schnabel explained that the disinflation process has slowed significantly after most supply-side shocks were reversed, making it a “quite bumpy” global phenomenon. She highlighted that in Eurozone, part of this difficulty is due to base effects and the reversal of fiscal measures.

Importantly, Schnabel underscored that inflation driven by “second-round effects” has become “more persistent.” She advocated for a cautious approach, stressing that “after so many years of very high inflation and with inflation risks still being tilted to the upside, a front-loading of the easing process would come with a risk of easing prematurely.”