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This year’s surge in inflation in the euro zone is still seen as temporary, even if prices continue to rise from already high levels, European Central Bank board member Isabel Schnabel told a German newspaper over the weekend.

Repeating the ECB’s long-standing view on inflation, Schnabel said that over the medium term, inflation still risked undershooting the bank’s 2% target.

She said, therefore, there was no reason to tighten policy in response to consumer price rises.

“As surprising as it may sound to some, we are more worried about the inflation rate being too low in the medium term rather than too high,” Focus magazine quoted Schnabel as saying on Saturday.

“While we expect inflation to continue rising until the end of this year, especially in Germany, our estimate is that it will fall significantly as of next year,” she said.

Euro zone inflation rose to 2.2% in July and could hit 3% by November before falling back and languishing below the ECB’s target for years to come, according to the central bank’s economic outlook.

Article Source – ECB still more worried about inflation being too low – Schnabel – RTE

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