Senior ECB official: rate rise too soon could choke recovery

A senior European Central Bank official says that raising interest rates prematurely could “choke off the recovery,” comments that come as inflation in the 19-nation euro area has hit a record rate

BERLIN -- A senior European Central Bank official says that raising interest rates prematurely could “choke off the recovery,” comments that come as inflation in the 19-nation euro area has hit a record rate.

The European Union's statistical office said Jan. 7 that the annual inflation rate rose to 5% in December — the highest level in the eurozone since recordkeeping began in 1997, breaking the previous record of 4.9% from November.

That compounded pressure for the ECB to act on inflation since it has kept interest rates ultra-low to stimulate an economy recovering from the depths of the pandemic. At present, analysts don’t expect the bank to raise rates until 2023.

In an interview with Saturday's edition of German daily Sueddeutsche Zeitung, ECB executive board member Isabel Schnabel stressed the bank's expectation “that inflation will fall significantly over the medium term.”