Schnabel is aware of the potential for inflation to fall below the ECB's 2% target:
- "That is why we should not raise interest rates prematurely, as that could potentially choke off the recovery"
But, if projections are that the CPI would hold above 2% the ECB would act "quickly and decisively"
Inflation in the euro area is currently well above target, circa 5%. So the question is ... is it transitory? Recently the Federal Reserve has furiously backpedalled on its mantra that inflation was transitory. ECB next?