The ECB has published an interview with executive board member Isabel Schnabel.
- Overall, the recent news on inflation is encouraging
- Core inflation has proven more stubborn
- We cannot take it for granted that inflation will only move downwards from now on, because we could have new supply side shocks
- we cannot say that we are at the peak or for how long rates will need to be kept at restrictive levels
- I still see upside risks to inflation
- Cites wages as upside risk
- Full text
The market is pricing in just a 20% chance of a further hike, with a first cut full priced in next July. These comments highlight the ‘possibility’ of rate hikes but that only reinforces that the ECB’s baseline is to hold rates here.
This article was written by Adam Button at www.forexlive.com. Source