European Central Bank Executive Board member Isabel Schnabel stated on Wednesday that inflation is unlikely to return to the 2% target over the medium term, implying that additional monetary tightening will be required, according to Bloomberg.
Key quotes
The ECB must prevent second-round effects early on.
Market seems to understand ECB reaction function well.
Extent of tightening to depend on incoming data.
Natural gas situation particularly concerning.
Economy looks to be gaining further momentum.
Inflation likely to top 2% for extended period.
Market reaction
Schnabel’s remarks appeared to have no immediate impact on the euro. At the time of writing, EUR/USD was trading lower near 1.1665 as the U.S. dollar edged higher.
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