ECB Director Schnabel: Much to be done in the fight against inflation

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“We need to see convincing evidence that inflation is returning to our 2% target in a sustainable and timely manner. We haven’t gotten to that point yet,” he said.

After years of zero and negative interest rates, the European Central Bank (ECB) has increased interest rates seven times in a row since July 2022 in the face of constantly high inflation. The key interest rate at which commercial banks can buy fresh central bank money is currently 3.75 percent. If banks park the money at the ECB, they now charge 3.25 percent interest.

The next rate decision of the ECB Council is scheduled for June 15. “How much interest rates need to increase will depend on incoming data,” Schnabel said.

“Given the great uncertainty about the persistence of inflation, the cost of doing too little remains higher than the cost of doing too much,” Schnabel said. “Because once inflation takes root in the economy, it is much more expensive to fight it. We still have a lot ahead of us.”

Inflation in the euro area was 6.1 percent in May, after 7.0 percent in April, according to an initial estimate by the Eurostat statistics office. In the medium term, the ECB aims for price stability in the euro area with 2 percent inflation.

(SDA)

Source :Blick