‘Even if we enter a recession, we have little choice but to continue the normalization path,’ Isabel Schnabel told the U.S. Federal Reserve’s Jackson Hole Economic Symposium
Central banks around the world risk losing public trust and must now act forcefully to combat inflation, even if that drags their economies into a recession, European Central Bank board member Isabel Schnabel said on Saturday.
“Even if we enter a recession, we have little choice but to continue the normalization path,” Ms. Schnabel told the U.S. Federal Reserve’s Jackson Hole Economic Symposium. “If there was a de-anchoring of inflation expectations, the effect on the economy would be even worse.” “If the public expects central banks to lower their guard in the face of risks to economic growth – that is, if they abandon their fight against inflation prematurely – then we risk seeing a much sharper correction down the road,” Ms. Schnabel added.