ECB's Isabel Schnabel warns of rapid interest rate cuts amid inflation fears
(MENAFN) Isabel Schnabel, a member of the European Central Bank's (ECB) executive board, has urged caution against implementing aggressive interest rate cuts, citing ongoing risks that inflation might not meet the ECB's 2 percent target. Speaking in Tallinn, Schnabel highlighted that while recent data supports the ECB's optimistic outlook for achieving its inflation goal by the end of 2025, high service price inflation could impede overall progress. She emphasized that the path to price stability relies on several critical assumptions, and therefore, monetary policy adjustments should be gradual and evidence-based rather than automatic.
Schnabel's remarks come as ECB officials are anticipated to consider a second interest rate cut at their upcoming meeting on September 12. Her warnings reflect concerns from some members of the ECB's Governing Council who believe that the battle against inflation is not yet resolved. Joachim Nagel, the governor of the German central bank and an ECB Governing Council member, recently cautioned against premature fiscal easing, noting that while the inflation targets are approaching, they have not yet been fully met. Similarly, ECB Chief Economist Philip Lane reaffirmed that a return to the 2 percent inflation target remains uncertain.
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