Central Banks
ECB’s Schnabel Sees Turning Point as Natural Rate Shifts Higher
- Higher level of R* may suggest policy not as tight as thought
- ECB officials plan to start lowering interest rates from June
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The natural rate of interest may be on the rise due to long-term factors including the climate transition and shifts in geopolitics, according to European Central Bank Executive Board member Isabel Schnabel.
The rate, which neither stimulates nor restricts economic expansion and is often referred to as R*, is one gauge tracked by central bankers striving for the appropriate level of monetary policy.