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(Bloomberg) — The European Central Bank should remain caution on interest-rate moves, according to Executive Board member Isabel Schnabel.
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“We need to maintain a steady hand for now,” she told the Table Today podcast in an episode aired Saturday, echoing earlier comments. “We can leave rates broadly at the level they are at now and are confident that we can also maintain price stability in this way.”
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The ECB has cut borrowing costs seven times, with economists and markets betting on another quarter-point move in June. While several policymakers have said they would back such a step, Schnabel dodged the question, saying that it’s to be seen what will happen.
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Uncertainty over the impact of US President Donald Trump’s trade war has clouded the outlook, with Schnabel highlighting the strong differences between the short and medium-term impact on inflation.
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Falling energy prices and a slowdown in the global economy “ought to be disinflationary in the short term — but in the medium term everything could reverse,” she said.
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The German executive board member also stressed that the recent appreciation of the euro should be “interpreted as a sign of confidence” in the common currency and Europe should seize the moment.
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“We now have a historic opportunity to further strengthen the international role of the euro,” she said.
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Schnabel said a big European bond market is a prerequisite for that, and reiterated calls to revive the debate about common securities.
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“I do think that it’s not fundamentally wrong to also think about joint debt to finance public goods in Europe,” she said.
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