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ECB: the rate should reach a «restrictive» level


December, 26 2022
watermark Economic news

Isabelle Schnabel, a member of the executive council of the European Central Bank, said that the central bank's interest rate would have to move into «restrictive territory» in order for inflation to return to the target level of 2%.


At the same time, speaking about the next four rate hikes, Schnabel repeated the words of ECB Head Christine Lagarde that the rate increase will continue «for a certain period of time» in order to return inflation to the target.


Thus, the final rate will be higher than many market participants expected, the politician also noted that the ECB underestimated the current constancy of inflation and initially did not take the signals of rapid price growth seriously enough.


Schnabel stressed that economists also underestimated the speed of eliminating failures in supply chains: it took much longer than expected. 


The current ECB forecasts suggest that inflation will noticeably exceed 2% over a long period, which may last until 2025.


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Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.