ECB Executive Board member Isabel Schnabel said policymakers are “very worried about what is currently happening with respect to the spread of the coronavirus.” “We know that this is really raising uncertainty to a large degree, for the global growth outlook but of course also for the outlook for the euro area.”

“But what we really need to understand when we are doing monetary policy is what are the potential medium-term implications, and at the moment this is unclear”, she added.

ECB Governing Council member Gabriel Makhlouf emphasized the need for vigilance regarding the lagging effects of monetary policy on growth and inflation.

He said today, “We must remain alert to the longer lags in the transmission of monetary policy to growth and inflation.” He highlighted the importance of evaluating the impact of past monetary policy decisions on the economy when determining further action.

Makhlouf also stressed that the ECB “must remain steadfast and ready to act as required” to ensure that inflation returns to its target level over the medium-term.

He added that interest rates must be maintained at a restrictive level to dampen demand, implying a continued cautious approach by the ECB in managing inflation expectations and economic growth.

ECB Governing Council member Robert Holzmann told Swiss newspaper NZZ, “When it comes to the interest rate outlook, the ECB has always signalled that an interest rate hike should not take place until shortly after the bond purchases have ended.”

“But it would also be possible to take a first interest rate step in the summer before the end of the purchases and a second at the end of the year. I would favour that.”

Also, Holzmann said and exit from negative interest rate would be an “important signal” to the society and markets. He would likely to see two rate hikes by the end of this year or early 2023. But, “some of my colleagues would perhaps be even more progressive here, while others would be more cautious,” he added.

“I think that a key interest rate of very roughly 1.5% in 2024 could be realistic, although that may well shift forward or backward somewhat,” he said, adding that 1.5% would be a benchmark for neutral monetary policy.

In an interview on March 7, published today, ECB Executive Board Member Benoît Cœuré said the economy slowdown “didn’t come as a surprise” even though it has been “stronger than expected and started sooner”. ECB’s decision last week “don’t represent a turnaround in our policy” but just “carefully calibrated to this diagnosis”. And ECB was just :adjusting to the new reality rather than reversing our course”.

Coeure added “we don’t see signs of a recession at present” and “we don’t see the need” to resume asset purchases. Economic growth is “robust” although it’s “less strong than before”. And it will “take longer for inflation to reach our objective, but it will get there”.

Coeure also said Italy is “in a difficult juncture” and it’s the “only euro area country that is experience a technical recession”. There was no improvement in the labor market and in the long term, Italy’s problem is well known and it’s “productivity growth”. But “I don’t believe that any of this has to do with the euro, otherwise it would be a general problem across the euro area.”

Full interview here.

In an interview with franceinfo radio, ECB Governing Council member Francois Villeroy de Galhau affirmed that the current interest rates, pegged at a historical high of 4% after ten consecutive hikes, are positioned at a “good level”. Furthermore, Villeroy added that the prevailing economic climate doesn’t warrant additional rate hikes.

However, Villeroy didn’t mince words when expressing his apprehensions about the escalating oil prices. The surge in prices this week can be attributed to potential disruptions in supply, catalyzed by the military confrontations between Israel Palestinian Islamist group Hamas. Such geopolitical tensions have historically influenced global oil prices. A notable instance from the past is the 1973 Yom Kippur War, which had a significant bearing on oil price dynamics.

Addressing this historical context, Villeroy remarked, “I don’t think that we are today in a similar situation (as the Kippur War) but we must of course remain very vigilant.” He went on to underscore that such events amplify the existing economic uncertainty.