Eurozone medium term inflation outlook is characterized by an exceptionally large degree of uncertainty that could increase due to the adverse supply shocks and climate-related risks, and hence, policymakers cannot predict a peak rate or the duration of the tightening phase as they embrace the data-dependent approach for each policy rate-setting session, European Central Bank Executive Board Member Isabel Schnabel said Thursday.
"Upside risks include stronger-than-expected growth in unit labor costs, possibly driven by lower than projected productivity growth, firmer corporate pricing power and risks of new adverse supply-side shocks," Schnabel said in a speech in Frankfurt.
"If such risks materialized, inflation could subside only very gradually or could even reaccelerate."
by Jyotsna V
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