Isabel Schnabel, member of the Executive Board of the European Central Bank, took part, on Wednesday 10 January, in the “Ask ECB” exercise by answering questions from the public on the X platform (formerly Twitter).
Isabel Schnabel indicated that it was too early to discuss key rate cuts, and that the ECB would keep rates at restrictive levels until it was confident that inflation would return to the 2% target on a sustainable basis. As President Christine Lagarde had indicated (see EUROPE 13314/11), Ms Schnabel also believed that additional data confirming the disinflation process would be necessary.
She also pointed out that the ECB’s monetary policy operates with a time lag, and that if the Governing Council raised “rates too strongly, this could lead to an undershooting of medium-term inflation and an unnecessarily strong slowdown of the economy”.
Ms Schnabel also indicated that, as a result of the expected easing of monetary policy, financial conditions had recently eased rather than tightened.
The economist added that geopolitical tensions represented an upside risk to inflation, and that one should remain vigilant.
Asked about the possibility of different rates for “greener” purposes - an option mentioned by Emmanuel Macron and several signatories (see EUROPE B13318B17) - Isabel Schnabel said that efforts should be intensified to green lending operations, particularly with regard to the collateral framework. She said that green targeted lending operations “could be considered when monetary policy needs to become expansionary again”.
Ms Schnabel considered it highly unlikely that the ECB would ever buy Bitcoins, pointing out that this speculative asset did not meet the criteria for foreign exchange reserves.
Finally, the economist stressed that the new European fiscal rules were going in the right direction, but lacked a central fiscal capacity.
More generally, Ms Schnabel added that further steps in European integration would benefit the single monetary policy.
For further information: https://aeur.eu/f/ac3 (Original version in French by Émilie Vanderhulst)