ECB, Schnabel: gradual approach to rate reduction remains appropriate

ECB Schnabel gradual approach to rate reduction remains appropriate

(Finance) – Isabel Schnabelmember of the Executive Board of the ECB, declared that “un gradual approach to remove the (monetary, ed.) restriction remains appropriate”. In his speech at the Safe and Cepr conference, at the Leibniz Institute for Financial Research in Frankfurt, Schnabel highlighted that in the euro area the disinflationary process proceeds as expected: “a factor that allowed us to further lower interest rates in October. But the fight against inflation is not yet won”.

Frankfurt has so far cut key interest rates for the eurozone 75 basis points overall in three moments: the first cut of 25 basis points in June, the subsequent ones in September and again in October. A new reduction is now expected at the last Board of Directors of the year, which will take place on December 12th.

“There growth forecast for 2025 is close to the potential of the Eurozone”, underlined Schnabel. For this reason, according to the member of the Executive Committee of the ECB, it is not necessary to bring rates “below the level of neutrality“. Furthermore, it remains highly uncertain what the level of neutrality of the eurozone rates is. “The closer we get – he declared – the more we will have to take time to evaluate how restrictive the line remains based on the prospects and data that will arrive”.

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