European Central Bank (ECB) Executive Board member Isabel Schnabel said over the weekend that the central bank has entered a phase of greater flexibility on interest rates, with monetary policy now in neutral territory and inflation nearing the ECB’s target.
Schnabel emphasized that the current rate level is no longer restrictive, allowing policymakers the space to evaluate economic developments before making further moves.
Key Quotes:
“We are no longer restrictive. I believe that we can now take the time to look at the situation first.”
“We now have maximum flexibility at this interest rate level.”
“Rates are now at a neutral level.”
“We have now reached neutral territory with our monetary policy and rates — this means that we are no longer restrictive, we can now take our time.”
“Inflation is now close to our target.”
“We will also get there this year. All in all, this is good news as far as inflation is concerned.”
Schnabel’s comments align with recent signals from other ECB officials indicating a shift to a more patient stance following a rate cut in early June.
Market Reaction:
The euro responded positively to the remarks. At the time of writing, EUR/USD was trading 0.17% higher on the day at 1.1414.
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