Comments by ECB executive board member, Isabel Schnabel, to Der Standard

  • Just because inflation is as low as it is now, it does not mean it no longer exists
  • Globalisation has had a dampening effect on price developments
  • We expect inflation to spike in 2021 from the current negative levels
  • Inflation should be bolstered by rising energy prices, expired German tax cut
  • There might be a price surge in services if vaccination happens faster
  • But such a development should not be confused with a sustained rise in inflation
  • This would therefore, not have a material impact on ECB monetary policy
  • There are no signs that one should worry about inflation being too high for now
  • Full interview

An interesting read but it pretty much reaffirms that the ECB is not going to look to change much in terms of policy even if inflation developments start to turn for the better in the next 6-12 months at least.

Inflation is going to be a key topic in the market this year, and the big question is likely not if we will see price pressures creep higher but rather can it be sustainable?