Isabel Schnabel, the German economist among the most hawkish exponents of the Governing Council of the ECB, dampened hopes that the European central bank could proceed with less aggressive rate hikes, underlining that “incoming data suggest that the space to slow down the pace of interest rate adjustments remains limited, even if we are approaching the ‘neutral’ rate”.
During an event held yesterday in London, Schnabel explained that the “extraordinarily large degree of uncertainty relating to these estimates implies that they cannot be used as a yardstick to say what pace of interest rate adjustments could be considered appropriate”.
Consequently, according to Schnabel, in the fight against inflation in the euro area, “monetary policy (of the ECB) must continue to depend on data”.
Christine Lagarde’s ECB announced on 27 October a new maxi rate hike of +75 basis points, after the historic one, the first of that intensity since the birth of the euro, on 8 September last.
Interest rates on the main refinancing operations, the marginal lending facility and the deposit facility will be raised to 2.00%, 2.25% and 1.50% respectively.