Key insights
- ECB's Schnabel suggests the Eurozone's improved economic resilience and reduced imbalances provide a solid foundation to manage the current inflation shock. While seemingly positive, persistent global inflation and divergent monetary policies could negatively impact US equities by creating economic uncertainty and potentially leading to a stronger dollar.
WASHINGTON, April 16 (Reuters) - The European Central Bank entered the current inflation shock in a strong position as the bloc managed to resolve many of its economic and financial imbalances over the past decade, ECB board member Isabel Schnabel said on Thursday.
The economy has grown increasingly resilient, imbalances have dissipated and sovereign spreads have narrowed, allowing the ECB to tame the last inflation shock with only a modest impact on growth, a positive omen for the current crisis, Schnabel said.
"It’s really remarkable that this was possible without causing a recession or financial instability, and this is quite important also in the presence of the most recent shock, because this puts us in a relatively good starting position to deal with this shock," she told a Peterson Institute lecture.