ECB Schnabel Says Core Inflation Remains Sticky

European Central Bank Executive Board member Isabel Schnabel said that the headline inflation of the euro area has begun falling, while the core inflation remained sticky.

During a presentation on Sunday at the Chicago Booth Conference on the Global Economy and Financial Stability, Schnabel also said that financial turbulence in the euro economy has notable effects in markets, but so far mainly on financial firms.

The ECB raised interest rates by 50 basis points earlier this month, in line with the guidance in February. However, the bank did not provide any forward guidance on interest rates.

Schnabel also warned on sharp repricing of rate expectations due to persistent inflation and financial instability in the economy.

The headline inflation drop persists, as energy contributions are falling quickly. Meanwhile, other components such as the food and services, are still on the rise, Schnabel said.

The policymaker drew attention to the strong labor market with rapid growth in wages.

"Higher bank lending rates eventually translate into lower loan growth", Schnabel said.

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