ECB’s Schnabel says June rate cut may be appropriate, path after is much more uncertain

European Central Bank Board member Schnabel speaking with Japanese media, Nikkei:

  • Says depending on incoming data rate cut in June may be appropriate
    but path beyond June is much more uncertain
  • Recent data have
    confirmed that the last mile of disinflation is most difficult
  • Based on current
    data, rate cut in July does not seem warranted
  • With inflation risks
    still being tilted to the upside, front-loading of easing process
    would come with a risk of easing prematurely
  • We cannot pre-commit
    to any particular rate path due to very high uncertainty
  • It’s virtually
    impossible to quantify a change in the natural rate of interest in
    real time with any reasonable degree of precision
  • The closer we get to
    a potentially neutral level, and this could be well above 2%, we need
    to move even more cautiously
  • 2% target has served
    us well, a change in the target is not appropriate
  • Geopolitical shocks are a key risk that we need to watch, and this
    poses upside risks to the inflation outlook
  • Over the
    longer run, geopolitical fragmentation would pose further upside
    risks to inflation by reducing the efficiency and reliability of
    global supply chains

Info via Reuters

This article was written by Eamonn Sheridan at Source