ECB Executive Board member Isabel Schnabel said in an interview, “in general, I think the recovery continues”. But due to new wave of infections, “we are seeing headwinds in the short term”. ECB is looking at a “weaker fourth quarter” which is “likely to spill over to the beginning of next year”. But she expected “a strong rebound thereafter”. So, “we see the recovery as being delayed rather than derailed.”
She added that the factors that pushed up inflation are “likely to either reverse or at least become less pronounced over the coming year”, including supply bottlenecks, energy prices and base effects. Inflation is going to “decline over the course of next year”, but ECB is “less certain about how fast and how strong the decline will be”.
Schnabel also said ECB is taking a “step-by-step approach to normalization” of monetary policy”. The pace can be adjusted to the incoming data. And, “we need to retain optionality to make sure that we sustainably reach our 2% target.”
