Vice-President Luis de Guindos said in Madrid today, “economic situation is marked by a high degree of uncertainty with “outbreaks of infections” and “appearance of new variants.” He warned that potential withdrawal of policy support measures has to be taken very carefully. It’s important for monetary policy keep all options open.

De Guindos reiterated that factors behind inflation are of “transitory nature. And he expects inflation to start falling next year.

Separately, Governing council member Francois Villeroy de Galhau “obviously, we must monitor closely the latest COVID developments, and the new Omicron strain”. But he also noted, “the economic effects of the successive waves have proven so far to be less and less damaging, and this one shouldn’t presumably change the economic outlook too much.”

ECB Executive Board member Isabel Schnabel said “November will prove to be the peak” of inflation. She added, “We predict inflation will fall back below 2%” target.

“I can very well understand that many people have worries,” she told Germany’s ZDF national television broadcaster in a live interview. “We must understand that this has to do with an extraordinary economic situation”, repeating the factors including base effects and rise in energy costs and raw materials prices.

ECB Executive Board member Fabio Panetta said the current inflation in Eurozone is bad but also temporary. It’s driven by supply chain disruptions and energy prices which are “bound to be overcome”. He would be among the first in favor to intervene if inflation are becoming more permanent.

But he added, “the central bank is not intervening because if it did, it would create more damage than benefit. It’s like an illness, not all medicines are good for all illnesses.”

ECB President Christine Lagarde said over the weekend that there is an “obvious concern” about the Eurozone economic recovery with the new Omicron variant. But she added, “I believe we have learnt a lot”.

“We now know our enemy and what measures to take. We are all better equipped to respond to a risk of a fifth wave or the Omicron variant”, she said to Italian broadcaster RAI.

“The crisis taught us this virus knows no boundaries. Therefore we will not be protected until we are all vaccinated”, Lagarde said.

In the accounts of the ECB’s October 27-28 meeting, it’s noted, “since the monetary policy space was constrained by the effective lower bound on interest rates, the increase in the inflation rate was seen as an opportunity to re-anchor inflation expectations solidly at the Governing Council’s 2% target over the medium term.”

Also, “a continued accommodative monetary policy stance would also be in line with the Governing Council’s new monetary policy strategy, which called for policy to be persistent when interest rates were at the lower bound and explicitly allowed for inflation to moderately exceed the target for a transitory period”.

Meanwhile, “some of the upside risks to the September 2021 staff projections had materialised and that the recent uptick in inflation was expected to be more persistent than previously anticipated.”

Full accounts here.