ECB Governing Council member Olli Rehn said on Saturday, “If we reacted strongly to inflation in the short term, we would probably cause economic growth to stop. It’s better to look beyond short-term inflation and look at what inflation is in 2023, 2024.” He expected inflation to be close to the 2% target in the coming years.

“We will have time to react in the March meeting and in later meetings if it looks like the situation is markedly different than it now appears,” Rehn added.

Another Governing Council member Ignazio Visco said, “the monetary policy stance remains expansionary, though the gradual normalization will continue at a pace consistent with the economic recovery and changes in the outlook for prices.”

“I do not believe that the overall picture underlying this stance has changed significantly,” Visco said. Still, “in the short term, there has been an increase in the risk of consumer prices growing faster than expected and production activity growing more slowly.”

ECB President Christine Lagarde said in an interview that raising interest rates “would not solve any of the current problems.” Instead, “if we acted too hastily now, the recovery of our economies could be considerably weaker and jobs would be jeopardized.”

“The U.S. economy is overheated, whereas our economy is far from being that,” she said. “That’s why we can — and must — proceed more cautiously. We don’t want to choke off the recovery.”

“Inflation may turn out to be higher than we projected in December,” Lagarde said. “We will analyze that in March, and then take it from there.” She also noted that inflation would exceed 2% target in medium term only if wages were to “significantly and persistently” break that level. “We are not seeing that at the moment at all,” she said. “In most euro-area countries, including Germany, wage demands are very moderate.”

ECB Chief Economist Philip Lane said in a blog post, “in terms of inflation dynamics, the relative price dislocations associated with bottlenecks are intrinsically short-term rather than permanent in nature.” Further, “initial increases in relative prices of categories that experienced high demand and/or low supply can be expected to level off or even reverse.”

Additionally, “it should be acknowledged that bottlenecks are not the only factor influencing the overall inflation environment, with a comprehensive monetary policy assessment taking into account a wide range of factors.”

“Since bottlenecks will eventually be resolved, price pressures should abate and inflation return to its trend without a need for a significant adjustment in monetary policy.”

“The logic underpinning a hold-steady approach to monetary policy is reinforced if the bottlenecks are primarily external in nature, caused by global disruptions in supply or a surge in global demand”.

Full blog post here.

ECB Vice President  Luis de Guindos said in a speech, “inflation is likely to remain elevated for longer than previously expected, but to decline in the course of this year.”

“That is the central case, but there are upside risks to that outlook,” he added. “Inflation could turn out to be higher if price pressures feed through into higher-than-anticipated wage rises, or if the economy returns to full capacity more quickly than foreseen.

“Some other central banks have either already raised rates or indicated that they will soon do so,” he said. “In making comparisons, it’s worth remembering that the euro area is at a different stage of the economic cycle, just as it was when the pandemic started. So it’s natural that central banks around the globe won’t necessarily start raising rates at the same time.”

Full speech here.