ECB’s Schnabel: High costs passed through to consumers more quickly when economy resilient
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Comments from the ECB’s Schnabel cross the wires: High costs passed through to consumers more quickly when economy resilient. Robust credit dynamics suggest that financial conditions are not yet restrictive. Possible economy responds more to the recent global yield rise than assu
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The ECB is navigating a complex landscape where rising energy costs are exerting upward pressure on inflation while simultaneously posing risks to economic growth. Per the full note from Greg Michalowski, ECB President Christine Lagarde highlighted that increased energy prices could lead to higher input costs, which may subsequently be passed on to consumers. This dynamic is reflected in market expectations, with traders pricing in three potential rate hikes by 2026, the first of which could occur as early as June. The desk believes that the ECB's cautious approach, coupled with the geopolitical tensions in the Middle East, will keep the central bank in a delicate balancing act between controlling inflation and supporting growth.
ECB Schnabel: Current price shock cannot simply be looked through.
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