Cautious Approach to Monetary Policy

European Central Bank (ECB) Executive Board member Isabel Schnabel emphasized the importance of a cautious approach to monetary policy during her speech at the CEPR Paris Symposium 2024, hosted by the Banque de France. Schnabel argued that while interest rates are nearing neutral levels and inflation risks remain broadly balanced, the ECB should proceed gradually and remain focused on economic data.

Economic Expansion Likely

Despite concerns over potential trade barriers impacting the euro area's economic outlook, Schnabel highlighted that model-based analyses suggest economic expansion is more likely than recession in the coming year. Her remarks followed last week's ECB's decision to lower key policy rates by 25 basis points, which aligns with the ECB's data-driven strategy in making monetary decisions.