The European Central Bank's next move may be an interest rate hike, rather than a cut as some still expect, but it will not happen in the near future, ECB board member Isabel Schnabel told Bloomberg News in an interview published today.
The ECB has cut rates by a combined 2 percentage points in the year to June, but it has since kept them on hold and has been contemplating whether it has done enough or if more may be needed to prevent inflation from going too low.
"Both markets and survey participants expect that the next rate move is going to be a hike, albeit not anytime soon," Schnabel was quoted as saying. "I'm rather comfortable with those expectations."
She argued that risks to growth and inflation are skewed towards higher readings than forecast by the ECB, in part because the economy weathered US tariffs better than projected.
Schnabel also noted that the decline in underlying inflation has stalled at a time when the economy is recovering and fiscal policy is expanding, creating conditions for price growth to accelerate.
