ECB Executive Board member Isabel Schnabel said in an interview that “inflation is not dead. Compared to the long course of economic history, there are only a relatively few years in which inflation was as low as it is now”. In particular, the decline in energy prices was a ” major reason why inflation fell sharply in 2020″. Temporary sales tax reductions also has a “dampening effect”, especially in Germany.
For now, there are no signs that one should worry about inflation being too high”. She added. “We are experiencing a pronounced weakness in demand. It is to be feared that the crisis will have longer-term effects on the labor market.
“Overall, the predominant problem is that economic demand is too weak, not that there are capacity bottlenecks, which is why prices are likely to rise too slowly,” she said.
