ECB's Schnabel: In all likelihood, inflation will noticeably decrease as soon as next year

The European Central Bank Executive Board member Isabel Schnabel, during a scheduled speech this Monday, said that inflation will noticeably decrease as soon as next year.

Additional quotes:

• Sentiment in the euro area is brightening.
• People are understandably worried about inflation developments.
• Should inflation sustainably reach our target of 2% unexpectedly soon, we will act equally quickly and resolutely.
• We will only start the normalisation process when we are confident of reliably reaching our inflation target.
• A premature monetary policy tightening in response to a temporary rise in inflation would choke the recovery.
• Against the background of rising inflation rates, particularly in Germany, it was a matter of concern to me to alleviate people’s concern that inflation may remain persistently too high.
• In all likelihood, inflation will noticeably decrease as soon as next year.
• There are good reasons to assume that the current constellation of fiscal and monetary policy in the euro area may finally chart the path out of the low-interest rate environment.
• In view of the extremely low level of inflation last year, the current inflation rates should be interpreted with caution.
• Inflation in the euro area, and also in Germany, is likely to ease noticeably next year.
• We will vehemently counter persistent upward and downward deviations from our inflation target.
• We will act carefully and cautiously in the current environment in order to finally pave the way out of the low-interest rate environment after so many years.
• If we adjust for the base effects from the pandemic, inflation today remains too low rather than too high.

Market reaction

The shared currency had a rather muted reaction to Schnabel’s remarks and remained at the mercy of the US dollar price dynamics. The EUR/USD pair has managed to rebound a bit from over two-week lows touched earlier this Monday and was last seen trading just below the 1.1800 mark, still down around 0.20% for the day.