Inflation reached its peak in November - ECB's Schnabel

BY Reuters | ECONOMIC | 11/29/21 03:06 AM EST

BERLIN, Nov 29 (Reuters) - The ECB believes that inflation peaked in November, meaning it would be premature to raise interest rates as price increases look likely to slow gradually next year, European Central Bank board member Isabel Schnabel said.

Inflation would trend back towards 2% next year, she told ZDF television on Monday, as supply bottlenecks and energy price growth level off. The current high figures reflected both supply bottlenecks and from a base effect resulting from prices being lower last year at the height of the pandemic.

"Most forecasts actually assume inflation will fall below 2%, so there really are no signs of price rises getting out of control," she said.

"If we thought inflation would permanently settle above 2%, we would definitely react. However, at the moment, we see no indications of this," she added. (Reporting by Thomas Escritt and Zuzanna Szymanska)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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