European Central Bank Board member Schnabel speaking with Japanese media, Nikkei:
- Says depending on incoming data rate cut in June may be appropriate but path beyond June is much more uncertain
- Recent data have confirmed that the last mile of disinflation is most difficult
- Based on current data, rate cut in July does not seem warranted
- With inflation risks still being tilted to the upside, front-loading of easing process would come with a risk of easing prematurely
- We cannot pre-commit to any particular rate path due to very high uncertainty
- It's virtually impossible to quantify a change in the natural rate of interest in real time with any reasonable degree of precision
- The closer we get to a potentially neutral level, and this could be well above 2%, we need to move even more cautiously
- 2% target has served us well, a change in the target is not appropriate
- Geopolitical shocks are a key risk that we need to watch, and this poses upside risks to the inflation outlook
- Over the longer run, geopolitical fragmentation would pose further upside risks to inflation by reducing the efficiency and reliability of global supply chains
Info via Reuters
