ECB Insight: Schnabel Plays it Safe, Hours Before an Announcement That Could Point the ECB’s Way

2 April 2025

By David Barwick – FRANKFURT (Econostream) – If it ever made sense for European Central Bank Governing Council members to avoid going out on any limbs, it does now, with mere hours to go until US President Donald Trump vents and in doing so initiates a key round of the burgeoning trade conflict.

Aware that whether the ECB will cut or pause in another 15 days may effectively be decided by Trump’s tensely awaited tariff announcement, ECB Executive Board member Isabel Schnabel, speaking in Paris, evidently decided that this was not the moment for comments directly touching on the current monetary policy outlook.

Of course, a speech entitled ‘Reviving growth in the euro area’ need not have inevitably expressed an opinion anyway on the topic of potential further policy easing the week after next. At the same time, it would normally raise no eyebrows were Schnabel to insert a few sentences indicating her views on the subject; speakers make far more remote digressions all the time.

On this occasion, though, it would have been inadvisable, given the potential for the situation to change significantly at such a short time horizon.

Our explanation for her avoidance of burning monetary policy questions at her last public appearance a week ago in London may be applicable today as well, namely that her relatively hawkish stance doesn’t correspond to the tentatively, possibly emerging outcome of another cut.

We think however that the more obvious reason for her reticence is just that there is little point in staking out a position that is subject to immediate revision.

To be sure, Schnabel reconfirmed that tariffs are bad for growth and price stability, but the truth of that does not depend on the calendar. Similarly, that the disinflation process is ‘well on track’ – a point she also made - is anything but new.

In the end, the observer is left wondering whether either of Schnabel’s two known remaining appearances before the quiet period starts on 10 April will yield more insights into her thinking.

Although both interventions – one tomorrow and the second on Saturday – will apparently be based around the same slides relied upon today, Schnabel could feel on sufficiently sure ground to undertake the kind of digression that would have been most clearly ill-advised today.

However, neither will we be surprised if she prefers to remain cautious up until the end; the cloud of uncertainty hanging low over the ECB stands little chance of being more than marginally thinned by whatever Trump has to say later today.