ECB hawk Schnabel scraps more rate hikes after 'remarkable' inflation drop
FRANKFURT (Reuters) — The European Central Bank can take further interest rate hikes off the table given a «remarkable» fall in inflation and policymakers should not guide for rates to remain steady through mid-2024, ECB board member Isabel Schnabel told Reuters.
The comments mark a dovish shift for Schnabel, seen as the most influential voice in the conservative camp of policymakers that has driven the steepest increase in interest rates in the ECB's history over the past 1-1/2 years.
Euro zone inflation tumbled to 2.4% last month from above 10% a year earlier after a record string of rate hikes. That has put the ECB's 2% inflation target within sight and raised doubts about policymakers' warnings that another two years of stubborn price growth may be ahead.
Schnabel, who had insisted just a month ago that rate hikes must remain an option because the «last mile» of the inflation fight may be the toughest, said she had shifted stance after three unexpectedly benign inflation readings in a row.
«When the facts change, I change my mind. What do you do, sir?» Schnabel said in an interview, repeating a quip often attributed to John Maynard Keynes. «The most recent inflation number has made a further rate increase rather unlikely.»
Schnabel also warned against guiding markets on interest rate moves too far ahead, given rapidly changing inflation figures that are surprising policymakers on the way down, as they did on the way up.
ECB President Christine Lagarde, French central bank chief Francois Villeroy de Galhau and Bank of Greece Governor Yannis Stournaras have all guided for steady rates for the next «few» or «several» quarters, even as markets see a rate cut in the early spring.
«We have been surprised many times in
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