European Central Bank Executive Board member Isabel Schnabel said businesses pass rising costs to consumers faster when the economy stays resilient, a hawkish-leaning signal. She also said the recent rise in global bond yields could restrain growth more than assumed, which would ease price pressures instead.
Isabel Schnabel, a member of the European Central Bank's Executive Board, said businesses pass higher costs through to consumers more quickly when the economy stays resilient. She added that robust credit growth suggests financial conditions are not yet restrictive, a combination that reads as hawkish because it questions how much current monetary policy is actually holding back demand.
However, Schnabel left room for a softer path. She said the economy may be responding more strongly to the recent rise in global bond yields than policymakers have assumed, which would dampen price pressures rather than add to them. She also said the ECB can return inflation to target more gradually if inflation expectations stay anchored.
The comments show a central bank weighing two opposing forces. Resilient demand keeps cost pass-through alive, but higher borrowing costs elsewhere in the market could ease price pressures instead. Whether demand actually cools now depends on which of those forces wins out.
Source: investingLive
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