Euro zone growth may be rebounding but the disconnect between inflation and growth remains, requiring the European Central Bank to remain patient, ECB Chief Economist Peter Praet said, just weeks before deciding whether to extend stimulus.
“We are undoubtedly experiencing a solid, broad-based and resilient economic recovery that is contributing to a narrowing of the output and unemployment gaps,” Praet said in Washington. “But there still appears to be a disconnect between growth and inflation.”
He added that the state of monetary policy transmission, that is how well the ECB’s stimulus is transmitted to the economy via financial markets and banks, will influence the bank’s decision on stimulus.
Source: Reuters (Reporting by Balazs Koranyi; Editing by Francesco Canepa)