ECB’s Schnabel: Eurozone underlying inflation sticky

Anil Panchal FXStreet

“Underlying inflation in the eurozone is proving sticky and the recent fall in energy costs may not pull it down as fast as some expect, European Central Bank (ECB) policymaker Isabel Schnabel said on Wednesday, highlighting the bank's chief concern,” reported Reuters late Wednesday.

Schnabel, head of the ECB's market operations, also added that last year's energy price spike seeped into the broader economy quickly but the reversal may take longer.

It’s worth noting that ECB’s Schnabel spoke at a National Association for Business Economics conference in Washington.

More comments

My suspicion is that it is not the case, that it may not drop out as quickly as it moves in.

And it's not even clear whether it's going to be completely symmetric in the sense that everything is even going to drop out at all.

ECB has some flexibility in reaching its 2% target and did not want to create needless pain by acting too quickly.

Our target is defined over the medium term, and so of course, we do not want to cause unnecessary pain.

Market reaction

EUR/USD remains sidelined around 1.0850 by the press time, after a mostly inactive day.

Also read: EUR/USD stays firm around 1.0840, with traders eyeing German and US inflation data

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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