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Investing.com -- European Central Bank Executive Board Member Isabel Schnabel stated Thursday that ECB interest rates are in a "good place" now, even as inflation is expected to slow.
Schnabel explained at a seminar that the projected slowdown in euro zone inflation - forecast by the ECB to reach 1.6% in 2026 compared to 1.9% last month - is only temporary.
This temporary dip is primarily due to energy price base effects and the stronger euro exchange rate.
"Inflation is projected to get below 2% over the short term, and this is to a large extent driven by energy and the exchange rate," Schnabel said. "But we also see that inflation is projected to return to 2% over the medium term."
She noted that core inflation remains stable around the 2% target level. "Core inflation never really moves away from 2%. And this is why we’re actually quite comfortable about that," she added.
Schnabel also pointed out that inflation expectations from consumers and firms currently stand above the 2% target, further supporting the central bank’s current policy stance.
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