ECB’s Schnabel: ‘I Would Caution Against Moving Too Quickly’

24 May 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Executive Board member Isabel Schnabel on Friday said that she would advise a careful approach to monetary policy easing.

In an extended, written version of an interview with German broadcasters ARD Plusminus and Tagesschau.de aired on Wednesday, Schnabel said, ‘I would caution against moving too quickly because there is a risk of cutting interest rates too fast. And we should definitely avoid that.’

The ECB was satisfied with the disinflation process, she said, but noted that ‘the path back towards price stability is bumpy.’

‘We see that some elements of inflation are proving persistent – especially domestic inflation, and services in particular’, she said. ‘We are monitoring the situation closely and ought to give ourselves sufficient time.’

The Governing Council’s decisions were made on the day of each meeting and there were still data to be received until the 6 June gathering, she said.

‘If the inflation outlook and the new data give us confidence that inflation will sustainably converge towards our target of 2%, a rate cut in June will be likely’, she said.

The ECB was confident about reaching the 2% target in 2025, she said.

‘We are now seeing a gradual recovery of the euro area economy. At the same time, inflation continues to decline’, she said. ‘This justifies the hope that we may succeed in returning to price stability without a recession.’