ECB’s Schnabel: Further rate hikes needed, 50 not off the table

ECB Executive Board member Isabel Schnabel said in a Politico interview that additional rate hikes are necessary, with the size of these hikes depending on incoming data. “The data we have so far shows that inflation is higher and the economy more resilient than projected,” she added that “data dependence means that 50 basis points are not off the table” for May meeting.

She also noted that “it’s far too early to declare victory on inflation.” She explained that if core inflation remains high and persistent, even if it reaches a peak, the information content of that data point might be limited. “So what we really need is confidence that it’s actually coming down in a sustained manner.”

Schnabel acknowledged that she cannot predict the terminal interest rate, noting that rates must be set on a meeting-to-meeting basis. She also addressed concerns about a potential recession, stating, “So far, there are no particular signs of a weakening in economic developments. At this point in time, I have no reason to believe that a recession is coming.”