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Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Christian Siedenbiedel on 22 July 2024
26 July 2024
Ms Schnabel, the ECB did not lower interest rates any further in July. Do the rising prices for services currently pose a problem for the central bank?
We continue to expect inflation to gradually converge to our 2% target over the course of next year. However, persistent services inflation shows that the “last mile” of the fight against inflation is particularly difficult.
Inflation now stands at 2.5% and the ECB’s target is 2%. Why should the last mile be difficult?
The first phase of the fight against inflation was relatively easy. Inflation in the euro area reached a peak of 10.6% in October 2022 before declining quickly to 2.4% in November 2023. This mainly reflected the reversal of earlier supply-side shocks. Energy prices fell back from previous highs and supply chain disruptions eased. But a part of inflation, emanating especially…