LONDON (Reuters) – European Central Bank board member Isabel Schnabel on Thursday pushed back on calls by many of her colleagues for the ECB to raise interest rates more modestly, saying it could hinder lowering inflation. s hard work.
Determined to tackle runaway prices, the ECB raised rates by a record 75 basis points at its last two meetings, but some central bankers, including Some governors, usually in favor of rate hikes, have opened the door to a more dovish pace.
However, Schnabel, the most influential in the hawk camp, said it was too early and could even backfire.
“Data so far suggest that there is still limited room to slow the pace of interest rate adjustments, even as we move closer to the ‘neutral’ rate estimate,” she told an event in London.
“The very large uncertainties surrounding such estimates mean they cannot serve as a yardstick for information about the appropriate pace of interest rate adjustments. Instead, policy needs to remain data dependent.”
In her view, expectations of a narrower interest rate path are even working against the ECB, taking the actual policy stance further away from the stance needed to bring inflation back to its 2% target.
Market expectations
Earlier this week, the most outspoken hawk in the ECB, Austria’s Robert Holzmann, went further A
basis point increase is supported, but Netherlands’ Klaas Knot and Germany’s Joachim Nagel appear to be open to a 75 basis point hike, as expected by financial markets.
Just before Schnabel, speaking in Milan, ECB Vice President Luis de Guindos said the next move would depend on data, but said he did not expect inflation in the euro zone to slow. will rise further. It hit 10.6% in October.
“For headlines (inflation)…I think we’ve peaked, Maybe it’s one decimal place up or down, it’s going to hang around, but I think in the first half of next year we’re going to see a drop,” he said at an event.
Policymakers have been adamant that rates need to rise further, but they cannot fully agree on the ultimate destination or pace, their accounts showed at their last meeting on Thursday.
“Discussing the use of concepts such as ‘neutral rate’ or ‘terminal rate’ consistent with inflation returning to target over the medium term, the ECB said in the report that the measures were not consistent with forecasts Different views were expressed on the link between the scenarios or their steady-state nature.
Dutch President Knott expresses skepticism more than market on ECB deposit rate , currently at 1.5% and peaking at 3%.
“Markets are expecting us to raise rates to 3% in the first half of next year and they will start from began to decline in the second half of the year. Honestly, I’m not sure about it,” Knott told a hearing in the Dutch parliament.
