ECB Executive Board member Isabel Schnabel struck a subtly hawkish tone in a Bloomberg interview, saying she is “rather comfortable” with market expectations that the ECB’s next move will be a rate hike. Still, she stressed that such expectations remain uncertain and that policymakers are “not currently” focused on when the next move might occur.
Schnabel reiterated that interest rates are “in a good place” and likely to remain there absent a major shock. What has changed, however, is the balance of inflation risks—which she said has “shifted to the upside”—a shift that naturally tilts the bias toward future tightening rather than easing.
Also, Schnabel flagged the possibility that the Eurozone’s natural rate of interest may be rising. Structural forces such as AI-driven investment and stepped-up public spending could lift the equilibrium rate over time, meaning the current stance may become increasingly accommodative if not adjusted. If policy drifts into a zone that is “too accommodative,” she said, that would be the moment to consider a further rate move.
