ECB's Schnabel 'bombshell' remarks go unnoticed by Euro as it 'tees' up rate hold possibility

Senior ECB official Isabel Schnabel delivered a bit of a bombshell during her remarks on Monday, as she not only said that Eurozone growth risks were to the upside, but she explicitly noted that she was comfortable with market bets favouring a hike, rather than a cut, as the next move in rates.

The euro barely batted an eyelid to her remarks, as her comments not only triggered a rethink in the rate path in the Euro Area, but in the rest of the developed world. We will add two caveats to Schnabel’s remarks.

Firstly, she is widely considered to be one of, if not the, most hawkish member on the Governing Council, so her views do not necessarily represent the majority of the committee.

Secondly, she also noted that any moves higher in rates would not happen for some time. At any rate, her communications perhaps tees up the possibility of a “hawkish hold” from the ECB when it next meets a week on Thursday.