ECB Executive Board member Isabel Schnabel said interest rates are “in a good place,” indicating no immediate need to shift policy as long as major shocks are avoided. “If there is no big shock, I would be rather relaxed,” she saidat a conference today.
Still, Schnabel warned that the risks to inflation are “tilted a little bit to the upside”. “Services inflation is a bit higher than we thought,” she noted, adding that pay pressures are cooling “more slowly than expected.”
Schnabel also pointed to signs that the Eurozone economy is recovering faster than feared, citing October’s PMI improvement as evidence that growth momentum is picking up even under higher U.S. tariffs.
“My narrative is one of an economy that is recovering, with a closing output gap,” she said.
