ECB’s Schnabel: No need for cuts amid inflation risk

The European Central Bank should keep interest rates steady as the euro zone economy is holding its own in the face of US tariffs and inflation may still come in higher than expected, ECB policymaker Isabel Schnabel told Reuters.

- FRANCESCO CANEPA BALAZS KORANYI

The central bank for the 20 countries that share the euro snapped a yearlong easing cycle in July, and policymakers are now waiting to see the full impact of US duties agreed in July before deciding if borrowing costs need to fall further.

Ms Schnabel — the most influential among the ECB’s hawks, as policymakers who favour higher rates are known — said she didn’t see the need for more cuts, and the current 2% policy rate may be “mildly” stimulating an already buoyant economy.

“Tbelieve that we may be already mildly accommodative and therefore I do not see a reason for a further rate cut in the current situation,” the German economist said in an interview.

The ECB is expected to keep interest rates on hold at its next meeting on Sept 11 but investors see a good chance it will cut rates again by June, money market data shows. Sources also told Reuters discussions about further easing were likely to resume in the autumn.