ECB's Schnabel Warns 4% Rate May Stay High as Eurozone Shock Threatens Inflation Expectations
Updated
Updated · bitcoinworld.co.in · Jul 6
ECB's Schnabel Warns 4% Rate May Stay High as Eurozone Shock Threatens Inflation Expectations
3 articles · Updated · bitcoinworld.co.in · Jul 6
Summary
Isabel Schnabel said the ECB cannot simply "look through" the eurozone’s current supply-side shock, warning that doing so could de-anchor inflation expectations.
Her Frankfurt remarks signal a hawkish tilt inside the Governing Council, suggesting policymakers are less likely to pause or reverse tightening soon despite slowing growth.
The ECB has already lifted its deposit rate from below zero to 4% in just over a year, and Schnabel’s stance points to borrowing costs staying elevated for households, companies and governments.
Markets reacted modestly after the speech, with the euro edging up against the dollar and bond yields rising as traders reassessed the chances of near-term rate cuts.
The comments sharpen the ECB’s trade-off: accept weaker growth and tighter financial conditions now to steer inflation back toward its 2% target.