x

Economy

Senior ECB Official: Rate Rise Too Soon Could Choke Recovery

January 15, 2022

BERLIN — A senior European Central Bank official says that raising interest rates prematurely could “choke off the recovery,” comments that come as inflation in the 19-nation euro area has hit a record rate.

The European Union’s statistical office said Jan. 7 that the annual inflation rate rose to 5% in December — the highest level in the eurozone since recordkeeping began in 1997, breaking the previous record of 4.9% from November.

That compounded pressure for the ECB to act on inflation since it has kept interest rates ultra-low to stimulate an economy recovering from the depths of the pandemic. At present, analysts don’t expect the bank to raise rates until 2023.

In an interview with Saturday’s edition of German daily Sueddeutsche Zeitung, ECB executive board member Isabel Schnabel stressed the bank’s expectation “that inflation will fall significantly over the medium term.”

“That is why we are not raising interest rates now, as some are calling for,” she said.

The ECB’s projections foresee medium-term inflation even falling below the bank’s target of 2%, though there is currently “great uncertainty” over the outlook, she added.

“That is why we should not raise interest rates prematurely, as that could potentially choke off the recovery,” Schnabel said. “But we will act quickly and decisively if we conclude that inflation may settle above 2%.”

She acknowledged, however, that the bank views the current year-on-year figures “with some concern, as they are higher than we initially expected.” But she noted that, calculated over a longer period, inflation has not increased as much as they suggest.

Inflation is traditionally a particularly acute concern in Schnabel’s native Germany, which has Europe’s biggest economy.

RELATED

A group of 77 migrants were rescued off a crippled sailing yacht after a large overnight operation in the southern Aegean Sea, Greek authorities said Monday.

Top Stories

Columnists

A pregnant woman was driving in the HOV lane near Dallas.

General News

NEW YORK – Meropi Kyriacou, the new Principal of The Cathedral School in Manhattan, was honored as The National Herald’s Educator of the Year.

Video

It’s Not as World-Famous as Ramen or Sushi. But the Humble Onigiri is Soul Food in Japan

TOKYO (AP) — The word “onigiri” became part of the Oxford English Dictionary this year, proof that the humble sticky-rice ball and mainstay of Japanese food has entered the global lexicon.

DENVER - His Eminence Metropolitan Constantine of Denver was enthroned on Saturday June 22 at the Assumption Cathedral in Denver, CO.

The first weekend of summer brought a tragic yet familiar pattern for American cities wracked by gun violence as mass shootings left dozens dead or wounded at a party in Alabama, an entertainment district in Ohio and a grocery in Arkansas.

PARIS (AP) — Dior staged an homage to sport on the eve of the Paris Olympics on the grounds of the Musée Rodin on the first day of Paris Couture Week on Monday.

ATHENS - This week, a cohort of SNF Paideia Fellows visited SNF's headquarters in Greece as part of an annual trip to Athens to celebrate their completion of the program.

Enter your email address to subscribe

Provide your email address to subscribe. For e.g. [email protected]

You may unsubscribe at any time using the link in our newsletter.