ECB’s Schnabel: I see only limited room for further rate cuts

European Central Bank (ECB) policymaker Isabel Schnabel said on Wednesday, “I see only limited room for further rate cuts.”

Additional quotes

I see only limited room for further rate cuts.

The impact of past ECB tightening is fading visibly.

I need to see services inflation come down.

I don't see a significant risk of inflation undershoot.

Inflation journey to 2% may still be bumpy in 2025.

The ECB may not be so far from neutral rates.

Easing too much would use up valuable policy space.

We can gradually move toward neutral if incoming data continues to confirm our baseline.

We may not be so far from the neutral rate.

Markets seem to assume that we will need to move into accommodative territory.

But I don't think such a step would be appropriate based on current conditions.

Has a strong preference for a gradual approach.

The costs of moving into accommodative territory could be higher than the benefits.

Market reaction

EUR/USD holds its upbeat momentum above 1.0500 following these less dovish remarks, adding  0.23% on the day to trade near 1.0510 as of writing.