Economics
ECB’s Nominees Back Negative Rates and Warn of Side Effects
- Schnabel and Panetta answer European Parliament questionnaire
- Both candidates also criticize European Union’s fiscal rules
Photographer: Bernd Hartung/ECB
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The European Central Bank’s controversial decision to cut interest rates and resume bond purchases received backing from two nominees to its Executive Board, who also warned that the side effects must be carefully monitored.
In answers to a European Parliament questionnaire before a hearing on Tuesday, German candidate Isabel Schnabel said the stimulus “can be justified by current inflation data as well as the outlook for inflation over the medium term.” She added that the experience of negative interest rates has been positive “overall,” but that there may come a point where the impact on bank profitability hinders monetary policy.