The European Central Bank (ECB) is expected to maintain current borrowing costs due to persistent upside risks to inflation, according to Executive Board member Isabel Schnabel. In a recent interview with Reuters, Schnabel, known for her hawkish views on monetary policy, indicated that the current level of accommodation is appropriate given the economic conditions in Europe.
Schnabel highlighted that the European economy is proving resilient despite ongoing trade disruptions stemming from the United States. However, she cautioned that price increases could surpass current projections in the coming years, driven in part by these trade-related factors. Her comments suggest a reluctance to ease monetary policy further, prioritising the control of inflation over providing additional stimulus to the economy.
“I believe that we may be already mildly accommodative and therefore I do not see a reason for a further rate cut in the current situation,” Schnabel stated. She also reiterated her belief that tariffs generally contribute to inflationary pressures, reinforcing her argument for a cautious approach to monetary policy adjustments.
