Schnabel: Bank issues could have disinflationary effect
European Central Bank (ECB) Executive Board member Isabel Schnabel stated that it can not be ruled out that the global banking turmoil has had an impact on credit conditions, specifically credit supply.
Those developments could have a disinflationary effect that Eurozone monetary policymakers should take into account when determining the level of interest rates, she said at a conference organized by the National Association for Business Economics (NABE). The impact of the banking crisis is expected to be smaller in the Eurozone than in the United States, Schnabel noted.
Commenting on prices, she pointed out that it is still unknown if inflation would slow down at the same pace it had previously accelerated. There is no serious debate in the euro area about moving the inflation target up from 2% and there is "little chance" it could start soon as central banks are focused on maintaining their credibility, Schnabel underlined.