FRANKFURT: The European Central Bank should start thinking about gradually withdrawing its economic stimulus measures, as the risk of acting “too late” against soaring inflation grows, an ECB policymaker has told the Financial Times.

The comments by Isabel Schnabel, a member of the ECB’s executive board, will strengthen the position of “hawks” on the governing council, who would like to see a faster tightening of monetary policy.

Record 5.1 percent inflation in the eurozone in January meant “the risk of acting too late has increased and therefore we need a careful reassessment of the inflation outlook,” Schnabel told the Financial Times in an interview published late Tuesday on the bank’s website.

The bank’s assessment had to be reviewed in light of the relatively mild impact of the Omicron variant on the economy, Schnabel said, as well as a recent drop in unemployment which could mean wage growth — and therefore inflation — is “stronger than we originally expected”.

“All of this implies that it has become increasingly likely that inflation is going to stabilise around our two-percent target over the medium term,” Schnabel said, according to a transcript of the interview released by the ECB.

Approaching this aim meant the bank had to “start thinking about a gradual normalisation of our policy”, Schnabel said.

At their last meeting at the beginning of the month, ECB policymakers confirmed a “step-by-step” reduction in the bank’s massive bond-buying programme, its main crisis-fighting tool, aimed at stoking economic growth.

The ECB also held its interest rates at record lows, including a negative deposit rate that effectively charges banks to park their money with the ECB overnight.

Under the ECB’s plan, any rate hikes will only come after it has brought a close to its bond-buying.

Soaring inflation has however forced other central banks, such as the United States Federal Reserve and the Bank of England, to dial up rate hikes and put pressure on the ECB to respond.

The Frankfurt-based institution is set to publish new economic forecasts alongside its next meeting in March, which could see inflation figures revised upwards.

In December, the ECB foresaw a 3.2 percent rise in prices in 2022, with pressure easing over the course of the year.

It was “increasingly unlikely” that the monthly inflation figure would fall below two percent by the end of the year as the bank had expected, Schnabel said.

The ECB executive also warned about the rising cost of housing in the eurozone, with only rental costs added in the inflation figure.

Research suggested that were recent housing price increases to be included, “core inflation would have been 0.6 percentage points higher”, Schnabel said, bringing the bank closer to its target.