isabel schnabel : new narratives on monetary policy – the spectre of inflation speech by ms isabel schnabel, member of the executive board of the european central bank, at the 148th baden - baden entrepreneurs ’ talk, frankfurt am main, 13 september 2021. * * * sentiment in the euro area is brightening. despite growing covid - 19 incidence numbers, consumers and firms are becoming more upbeat about the future. the european commission ’ s economic sentiment indicator has improved markedly since the beginning of the year and was near record highs in august. at the same time, consumer prices are increasing at a faster pace, following years of very low inflation. in august, inflation in the euro area stood at 3 %, significantly exceeding the 2 % mark that the governing council of the european central bank ( ecb ) has defined as its new mediumterm inflation target ( slide 2 ). in germany, the inflation rate, as measured by the harmonised index of consumer prices ( hicp ), hit 3. 4 % in august – a level not seen in 13 years. and it is likely to continue growing until the end of the year. people are understandably worried about these developments. higher inflation lowers the purchasing power and reduces wages and interest income in real terms – that is adjusted for inflation. real interest rates on savings deposits in germany are now visibly negative after the recent increase in inflation ( slide 3 ). negative real interest rates are nothing out of the ordinary per se. both before and after the euro was introduced, there were longer periods of negative real interest rates. 1 the most recent spike in consumer prices, however, coincided with a phase of very low or even negative nominal interest rates, which compounds people ’ s worries. indeed, since the ecb ’ s key interest rates were last lowered in september 2019, we have seen commercial banks increasingly passing negative nominal interest rates on to their customers. since then, the share of bank deposits of private households that are subject to negative rates has more than doubled in some euro area countries, although still only 9 % of all deposits in these countries are affected ( slide 4 ). at 43 %, the share of corporate deposits affected is already much higher. these concerns affect us as central bankers directly – given that the ecb has a clear mandate to ensure price stability. it is therefore important to offer a factual explanation for the recent price increases and an assessment of future risks, especially in germany where many supposed experts and the media are

peter praet : europe ’ s economic recovery and implications for monetary policy remarks by mr peter praet, member of the executive board of the european central bank, at the international conference of commercial bank economists ( iccbe ) in france, paris, 6 july 2017. * * * since june 2014, the ecb has introduced a range of unconventional measures, alongside our conventional ones, in pursuit of its price stability objective. together, these measures have proved to be extremely effective in preventing a period of disinflation from spiralling into one of deflation. nearly three years on, the risks of deflation have vanished and the transmission of our policy measures to the real economy is clearly evidenced by the recovery, which has gathered some further momentum recently. before turning to price developments and monetary policy, let me say a bit more about the latest economic developments in the euro area. the solid upswing continues to broaden across sectors and countries. real gdp in the euro area has expanded for 16 consecutive quarters, growing by 1. 9 % year - on - year during the first quarter of 2017, according to eurostat. this compares with the latest potential growth estimates for the euro area of just over 1 %. 1 moreover, recent survey data point to a strong start to the second quarter. for example, the composite output purchasing managers ’ index – which is strongly correlated with growth in the euro area – remains close to six - year highs in june. the forward - looking components of the survey continue to point to growth in the quarters ahead. moreover, economic sentiment is at its highest level in nearly a decade and has increased notably from may to june 2017. 2 unemployment is at its lowest level in eight years. looking ahead, the latest eurosystem staff macroeconomic projections point to a continued economic expansion at a somewhat faster pace than previously expected. the breadth of the economic recovery is also notable. the dispersion of growth rates across both countries and sectors is at its lowest level in two decades, reflecting a convergence of growth rates around higher levels. this is reassuring for the growth outlook because recoveries tend to be firmer and more robust when they are broad - based. it ’ s a similar picture for employment, with dispersion of employment growth rates across euro area countries at its lowest level on record. the increasingly solid cyclical recovery reflects the success of our monetary policy measures, which have worked their way through the financial system and led to a significant easing of financing conditions for consumers