Isabel Schnabel, one of the six members of the Management Board of the European Central Bank, believes in an interview to the “world” that inflation should drop gradually during 2022.
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Isabel Schnabel, one of six members of the Management Board of the European Central Bank (ECB), continues to think that inflation will gradually fall towards the end of 2022, while highlighting that “uncertainty is exceptionally high”.
Between the economic rebound, very fast, and the new pandemic wave, the situation is difficult to read. How do you see it?
The uncertainty is actually very high, as it has since the beginning of the pandemic of Covid-19. In general, I think the recovery continues. But because of the new wave of infections and the new variant, we observe against the short-term winds. We are now planning a lower economic activity in the fourth quarter and until the beginning of 2022. But we are considering a stronger rebound thereafter. It is simply a time offset, often observed during the pandemic. Households in the euro area have accumulated significant savings, which supports the recovery. We do not think that the recovery will derail, but it will be delayed.
Inflation reaches 4.9% in the euro area, 6% in Germany, more than 9% in some Baltic countries . Are you worried?
These high figures are linked to the specific situation due to the pandemic. At the time of the reopening of the economy, there was a strong rebound in demand. The offer could not respond quickly enough, partly because of sanitary restrictions. This resulted in numerous disturbances of the supply chain and a rise in commodity prices, especially energy prices. This phenomenon has been amplified by different statistical effects, because we compare today’s prices to those of a year ago, in the middle of the pandemic, which had collapsed. This falters a little painting.
All these factors are nevertheless likely to reverse or, at least, to diminish during 2022. Take the bottlenecks: we do not know exactly how fast, but it is clear that with Time will be resolved. Similarly, it is very unlikely that energy prices continue to increase at the same speed. And, finally, the basic effects will disappear. We know that inflation will be raised for a while, but also that it will decrease during 2022. What we know less precisely, it is at what pace and to what extent this slowdown will occur.
This explanation has been heard on temporary inflation since summer. And yet, month after month, it surprises on the rise …
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