European Central Bank Board Member Schnabel cautious on a June ECB rate cut

European Central Bank Board Member Schnabel spoke on Saturday, expressing a cautious approach to further rate cuts. Schnabel cited lingering uncertainties from global trade tensions and inflation dynamics.

• “We need to maintain a steady hand for now”

• warned that falling energy prices and slowing global growth may lower inflation in the short term but could reverse in the medium term.
• “We can leave rates broadly at the level they are at now and are confident that we can also maintain price stability in this way.”

On June’s decision (the Bank meet on the 4th and 5th, markets are expecting a rate cut) Schnabel refrained from confirming her outright support:

• “It’s to be seen what will happen”

Schnabel remarked also on the euro’s recent appreciation:

• “We now have a historic opportunity to further strengthen the international role of the euro”. To support that goal she reiterated the need for a unified European bond market and revisiting the idea of joint debt issuance. “I do think that it’s not fundamentally wrong to also think about joint debt to finance public goods in Europe”

Schnabel made similar ‘steady hand’ comments earlier last week:

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