ECB's Schnabel: The economy could be hit by new supply-side shocks again

The story of Germany in the years after the First World War is a striking reminder of how price stability and democracy go hand in hand. The historian Gerald Feldman famously called those troubled years “the Great Disorder”.[ 1 ] And although the relative contributions of the hyperinflation of the 1920s and the deflation of the 1930s are still debated, there is little doubt that wild swings in prices eroded the economic foundations of democracy. One of the ways in which price instability does this is by triggering large distributional effects, which often hurt the poorest in society the most. For example, ECB analysis finds that the spike in inflation over the last 18 months has disproportionately affected low-income households as they spend more of their income on necessities like energy and food, which saw surging prices.[ 2 ] These are fundamental reasons why, in most liberal democracies, central banks have been entrusted with mandates to preserve price stability. And at the ECB, we will never compromise on our mandate. That is why, in response to rising inflation, we raised interest rates at the fastest pace in our history, by 450 basis points in just over a year. And we will return inflation to our medium-term target in a timely manner. post: <EUR=>:*LAGARDE: NOT THE TIME TO START DECLARING VICTORY ON INFLATION *ECB'S LAGARDE: CAN ACT IF WE SEE RISING RISKS OF MISSING TARGET post: *LAGARDE: FUTURE DECISIONS CONDITIONAL ON INCOMING DATA *LAGARDE: CAN ALLOW SOME TIME FOR ECB POLICY TO UNFOLD post: ECB Pres Lagarde: Expect Headline Inflation To Rise Again Slightly

post: ECB’s Centeno: High Probability We've Reached Peak Rate post: ECB'S CENTENO: INFLATION IS FALLING FASTER THAN IT ROSE.