Risks to inflation in the euro zone are skewed to the upside as the economy gathers momentum and governments start spending large sums on military and infrastructure, according to European Central Bank Executive Board member Isabel Schnabel.
“My narrative is one of an economy that is recovering, with a closing output gap, expecting a significant fiscal impulse, which stimulates the economy,” said Schnabel, who’s currently seen as the most hawkish member of the Governing Council. “This leads me to the conclusion that if anything, risks are rather tilted a little bit to the upside.”