ECB should raise rates-Schnabel
2022.12.25 01:35
ECB should raise rates-Schnabel
Budrigannews.com – In an interview that was published on Saturday, ECB policymaker Isabel Schnabel stated that the ECB must be prepared to take the heat and raise interest rates further, including by a greater amount than the market anticipates, if that is required to reduce inflation.
Last week, the European Central Bank (ECB) raised interest rates for the fourth time in a row and hinted at more increases. This jolted bond markets in the Eurozone and sparked an outcry from the Italian government.
The ECB’s current rate of 2% on bank deposits is now expected to rise to 3.4% next year, up from the 2.75 percent peak anticipated prior to the decision last week.
The leading hawkish voice in the ECB’s camp, Schnabel, has made it possible to raise the deposit rate even higher than the market anticipates if the outlook for inflation calls for it.
According to what she stated to the German newspaper Frankfurter Allgemeine Zeitung, “Whether we will still need to go higher than that will depend on the future inflation outlook.”
She went on to say that the ECB will focus on inflation expectations in the medium term rather than current readings, and that there was little risk of raising borrowing costs too much at the moment because real interest rates are still very low.
The most recent decision made by the ECB has been criticized by three high-ranking ministers in Italy, resulting in skyrocketing borrowing costs for debt-laden Italy.
Schnabel stated that the ECB ought to withstand the pressure.
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She stated in the interview, “We can expect increasing pushback, and we need to withstand it.” This is precisely the reason why central banks are independent. A new headline has been added to this story.)
