ECB's Schnabel: June rate cut may be appropriate, path after is much more uncertain
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European Central Bank (ECB) Board member Isabel Schnabel said on Friday that the central bank may cut interest rates in June, but policymakers should look very carefully at the data because there is a risk of easing prematurely, per Reuters.
Key quotes
“Says depending on incoming data rate cut in June may be appropriate but a path beyond June is much more uncertain.”
“Recent data have confirmed that the last mile of disinflation is most difficult.”
“Based on current data, a rate cut in July does not seem warranted.”
“With inflation risks still being tilted to the upside, front-loading of easing process would come with a risk of easing prematurely.”
“We cannot pre-commit to any particular rate path due to very high uncertainty.”
“It's virtually impossible to quantify a change in the natural rate of interest in real-time with any reasonable degree of precision.”
“The closer we get to a potentially neutral level, and this could be well above 2%, we need to move even more cautiously.”
“2% target has served us well, a change in the target is not appropriate.”
“Geopolitical shocks are a key risk that we need to watch, and this poses upside risks to the inflation outlook.”
“Over the longer run, geopolitical fragmentation would pose further upside risks to inflation by reducing the efficiency and reliability of global supply chains.”
Market reaction
These comments have little to no market reaction to the Euro. The EUR/USD pair is trading at 1.0861, losing 0.06% on the day.
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