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2/26, 10:11 AM (Source: TeleTrader)
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ECB's Schnabel: Still room for cutting interest rates

The European Central Bank (ECB) still has some room to cut interest rates, but all the changes in their value must be monitored closely, member of its Executive Board Isabel Schnabel remarked on Friday.

Schnabel warned a rise in real long-term rates must not lead to withdrawing fiscal policies aimed at combating the crisis caused by the coronavirus pandemic "too early and too abruptly." She noted the ECB might need to contribute with more support if "yields hurt growth," although the current increase in nominal yields was a "welcome sign" of progress in the inflation expectations.

Schnabel added the risks of "moral hazard" should not set the ECB on a "course of inaction," thus reaffirming the importance of monetary and fiscal policies for economic recovery.

Breaking the News / JR