Central Banks Must Tighten Policy Even Into a Recession, ECB’s Schnabel Says
JACKSON HOLE, Wyo.—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.
Inflation is close to double-digit territory in many of the world’s top economies and any decline is likely to be slow, keeping prices above central bank targets for years to come.
“Even if we enter a recession, we have little choice but to continue the normalization path,” 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.”…