ECB’s Schnabel: Rate Cuts Mitigate Economic Weakness But Don't Address Structural Issues

11 February 2025

ECB’s Schnabel: Rate Cuts Mitigate Economic Weakness But Don't Address Structural Issues
Isabel Schnabel, Executive Board member of the European Central Bank, at the International Holocaust Remembrance Day at the ECB in Frankfurt on January 27, 2025. Photo by Adrian Petty/ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MADRID (Econostream) – European Central Bank Executive Board member Isabel Schnabel said on Tuesday that the ECB’s interest rate cuts could help deal with a feeble economy but could not remedy structural problems.

In a panel discussion at the Institut für Arbeitsmarkt- und Berufsforschung in Nuremberg, Germany, Schnabel said that ‘interest rate cuts can mitigate the economic weakness’, she said, ‘but they can’t solve the structural crisis’, which included high energy prices and labour shortages related to demographics.

Europe had to reconfigure its economy, especially after Donald Trump’s second mandate as US President and his approach to tariffs, she said.

‘The export-led growth model needs to be reconsidered in the face of this increasing geopolitical fragmentation’, she said.

 

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