Central Banks
ECB’s Schnabel Sees Only Limited Room for Further Rate Cuts
- Borrowing costs nearing neutral level, she says in interview
- Easing too much could squander ‘valuable policy space’
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The European Central Bank needs to be wary of cutting interest rates too far as borrowing costs are already near a level that no longer restrains the economy and going lower could backfire, according to Executive Board member Isabel Schnabel.
Officials can continue to loosen monetary policy, but should do so only gradually to avoid taking rates below the so-called neutral threshold, Schnabel said in an interview. Easing too much could squander valuable policy space, the hawkish policymaker warned.