European Central Bank (ECB) executive board member Isabelle Schnabel this Friday once again spoke out against cutting interest rates too early, fearing that inflation would accelerate again.
Speaking at the Economic and Monetary Union Laboratory (EMU Laboratory) at the European University Institute in Florence, Italy, Schnabel said monetary policy should “remain contractionary” until the ECB is confident that price growth will slow. on a “sustainable path” towards the medium-term target of 2%.
“The recent period of high inflation suggests that to avoid having to adopt stop-and-go policies similar to those of the 1970s, we must be careful not to prematurely change our policy position,” Isabel Schnabel said at the event. .
The statement reinforces remarks on Thursday by ECB President Christine Lagarde, who warned against “hasty decisions” to cut interest rates, arguing there was not enough evidence that euro zone inflation was returning to normal. ).
Earlier, Lagarde suggested that summer would be the “ideal time” to reduce key interest rates in the eurozone.
At its monetary policy meeting on January 25, the ECB maintained base interest rates for the third time in a row, following ten hikes since July 21, 2022.
The next ECB monetary policy meeting will take place on March 7.