Latest news with #Schnabel
Irish Independent
13-05-2025
- Business
- Irish Independent
Tracker mortgage holders on alert as doubt cast over expected ECB rate cut next month
ECB board member Isabel Schnabel said turmoil in the global economy was fuelling price pressures. Her comments came as a new mortgage lender cut its lending rates by up to 0.95 percentage points. Ms Schnabel said inflation was at risk of exceeding the ECB's 2pc target in the medium term. The ECB's main role is to control inflation and it uses interest rates to achieve this. The Frankfurt-based central bank has cut rates seven times in the past year, with another 0.25 of a percentage point rate cut expected on June 5, a move that would directly benefit 130,000 tracker mortgage holders. Two additional rate cuts later in the year had been expected by markets. Rate cuts should make borrowing more affordable for first-time buyers if banks and non-bank lenders pass on the lower eurozone rates in the form of lower mortgage rates. However, lower mortgage rates would also leave more new borrowers chasing a limited supply of housing for sale. Ms Schnabel cast doubt on new cuts. She wants to keep rates unchanged since they are already low enough not to hold back the European economy. 'Now is the time to keep a steady hand. The appropriate course of action is to keep rates close to where they are today,' Ms Schnabel told a conference. Financial markets see a 90pc chance of a rate cut in June and expect another cut or two in subsequent months, indicating that Ms Schnabel's view goes counter to investor bets. In the near term, inflation could even dip below the ECB's 2pc target, Ms Schnabel said. This is due to lower energy costs, a strong euro, anaemic economic growth in the eurozone and high uncertainty created by the US administration's trade war, she said. But there is a big risk that costs could go the other way, and rise, in the medium term, pushing up inflation. Inflation in the currency zone could be boosted by an expected spending surge by governments in the eurozone, driven by Germany's pledge to boost defence and infrastructure investment. Damage to international trade due to US-imposed tariffs could also push up costs and boost prices. Non-bank lender Núa Money has reduced its rates across its residential mortgage and equity release products, with cuts of up to 0.95 of a percentage point on its Switcher Extra mortgage product. Núa, which began lending in Ireland only late last year, said it would have new rates starting from 3.6pc for first-time buyer, mover and switcher products. Mortgage broker Michael Dowling said reductions in rates were always welcome. But he said that in relation to owner-occupier rates, the reduction of 0.25 of a percentage point would be geared to those borrowing less than 70pc loan to value, which would exclude the majority of first-time buyers. Mr Dowling said that, for second-time buyers, the three- and five-year fixed offerings were very competitive, where the loan-to-value is typically less than 70pc. The reduction of 0.25 of a percentage point would save borrowers €39 a month on a €300,000 mortgage, he said.
The Star
12-05-2025
- Business
- The Star
ECB needs steady hand and must not overdo rate cuts, Schnabel says
People walk in to the headquarters of the European Central Bank (ECB) in Frankfurt am Main, western Germany, past a giant Euro logo on April 17, 2025 ahead of the Eurozone's monetary policy meeting. (Photo by Kirill KUDRYAVTSEV / AFP) Stanford (California): The European Central Bank (ECB) needs a 'steady hand' and mustn't lower borrowing costs too much as inflation could turn out to be higher in the future, executive board member Isabel Schnabel says. 'By keeping interest rates near their current levels, we can be confident that monetary policy is neither excessively holding back growth and employment, nor stimulating it,' she said. 'We are thus in a good place to evaluate the likely future evolution of the economy and to take action if risks materialise that threaten price stability,' she added Over the medium-term, risks to inflation 'are likely tilted to the upside, reflecting both the increase in fiscal spending and the risks of renewed cost-push shocks from tariffs propagating through global value chains,' she said in a speech at Stanford University last Friday. The ECB has reduced rates seven times since June and officials have signalled they're ready to do more as US President Donald Trump's trade tariffs threaten to lower growth, with another move looking likely next month. Investors are currently pricing in two to three more cuts this year and some economists like Gilles Moec from Axa Group expect even more aggressive easing, unless the trade negotiations resolve quickly and positively. However, Schnabel urged caution in her first public remarks since the April reduction and her first in-depth monetary-policy comments in public since February, pouring some cold water on rate-cut expectations. Schnabel said that in the current situation, the high level of economic uncertainty, together with the sharp fall in energy prices and a stronger euro 'will likely dampen headline inflation in the short-run, potentially pushing it below our 2% target.' In April, consumer-price growth stood at 2.2%. But monetary policy should focus on the medium-term, she said. 'Given long and variable transmission lags, reacting to short-term developments could result in the peak impact of our policy only unfolding when the current disinflationary forces have passed,' the ECB board member added. She highlighted two factors that could have the size and persistence to pull underlying inflation sustainably away from the ECB's goal: a rise in public spending and global fragmentation. Fiscal policy 'is set to expand on a scale unseen outside periods of deep economic contraction', she said, also highlighting plans by the new German government. 'On balance, the fiscal impulse is likely to put upward pressure on underlying inflation over the medium term.' On fragmentation and in particular US tariffs she admitted that it's difficult to assess the implications as negotiations are ongoing. 'Overall, however, there are risks that a lasting and meaningful increase in tariffs will reinforce the upward pressure on underlying inflation arising from higher fiscal spending over the medium term,' she said. She also said that eurozone foreign demand may prove resilient and trade diversion may benefit the bloc's exports. 'Should prohibitive tariffs on Chinese imports remain in place, they will measurably raise the eurozone's price competitiveness in the US market,' she said. — Bloomberg
RTÉ News
12-05-2025
- Business
- RTÉ News
ECB should keep steady hand, hold rates close to current levels, Schnabel says
The European Central Bank should stop cutting borrowing costs as turmoil in the global economy is fuelling price pressures and inflation was at risk of exceeding the bank's 2% target in the medium term, ECB board member Isabel Schnabel has said. The ECB cut interest rates seven times in the past year as inflation has been rapidly retreating, and policymakers have already started to lay the groundwork for another cut on June 5, taking the deposit rate to 2%. Schnabel, an outspoken policy hawk, poured cold water on those expectations, making an explicit argument for keeping rates unchanged since they are already low enough not to hold back the economy. "Now is the time to keep a steady hand," Schnabel told a conference at Stanford University. "The appropriate course of action is to keep rates close to where they are today – that is, firmly in neutral territory." Financial markets see a 90% chance of a rate cut in June and see another cut or two in subsequent months, indicating that Schnabel's view goes counter to investor bets. The complication for policymakers is that short-term and medium-term inflationary forces are quite different. In the near term, inflation could even dip below the ECB's 2% target given lower energy costs, a strong euro, anaemic economic growth and high uncertainty created by the US administration's trade war, Schnabel argued. But monetary policy affects the economy with long lags and by the time further policy easing really impacts the economy, the drag on inflation may have faded, replaced by quite different forces that push up costs, she argued. Inflation could be boosted by an expected government spending surge, driven by Germany's pledge to boost defence and infrastructure investment. But more importantly, trade fragmentation, a byproduct of US-imposed tariffs, could also push up costs and boost prices. "Over the medium term, risks to euro area inflation are likely tilted to the upside, reflecting both the increase in fiscal spending and the risks of renewed cost-push shocks from tariffs propagating through global value chains," Schnabel said. Schnabel even challenged the argument that US tariffs without European retaliation are net deflationary for the euro area. "Even if the EU does not retaliate, higher production costs transmitted through global value chains could more than offset the disinflationary pressure coming from lower foreign demand, making tariffs inflationary overall," Schnabel argued. Retaliation, as already outlined by the bloc, would only magnify this process and keep pressure on prices further out. By keeping a steady hand, the ECB could buy insurance against a wide range of possible outcomes and this approach would be robust enough to deal with different scenarios, Schnabel argued.
Yahoo
10-05-2025
- Business
- Yahoo
ECB should keep steady hand, hold rates close to current levels, Schnabel says
(Reuters) -The European Central Bank should stop cutting borrowing costs as turmoil in the global economy is fuelling price pressures and inflation was at risk of exceeding the bank's 2% target in the medium term, ECB board member Isabel Schnabel said on Friday. The ECB cut interest rates seven times in the past year as inflation has been rapidly retreating, and policymakers have already started to lay the groundwork for another cut on June 5, taking the deposit rate to 2%. Schnabel, an outspoken policy hawk, poured cold water on those expectations, making an explicit argument for keeping rates unchanged since they are already low enough not to hold back the economy. "Now is the time to keep a steady hand," Schnabel told a conference at Stanford University. "The appropriate course of action is to keep rates close to where they are today – that is, firmly in neutral territory." Financial markets see a 90% chance of a rate cut in June and see another cut or two in subsequent months, indicating that Schnabel's view goes counter to investor bets. The complication for policymakers is that short-term and medium-term inflationary forces are quite different. In the near term, inflation could even dip below the ECB's 2% target given lower energy costs, a strong euro, anaemic economic growth and high uncertainty created by the U.S. administration's trade war, Schnabel argued. But monetary policy affects the economy with long lags and by the time further policy easing really impacts the economy, the drag on inflation may have faded, replaced by quite different forces that push up costs, she argued. Inflation could be boosted by an expected government spending surge, driven by Germany's pledge to boost defence and infrastructure investment. But more importantly, trade fragmentation, a byproduct of U.S.-imposed tariffs, could also push up costs and boost prices. "Over the medium term, risks to euro area inflation are likely tilted to the upside, reflecting both the increase in fiscal spending and the risks of renewed cost-push shocks from tariffs propagating through global value chains," Schnabel said. Schnabel even challenged the argument that U.S. tariffs without European retaliation are net deflationary for the euro area. "Even if the EU does not retaliate, higher production costs transmitted through global value chains could more than offset the disinflationary pressure coming from lower foreign demand, making tariffs inflationary overall," Schnabel argued. Retaliation, as already outlined by the bloc, would only magnify this process and keep pressure on prices further out. By keeping a steady hand, the ECB could buy insurance against a wide range of possible outcomes and this approach would be robust enough to deal with different scenarios, Schnabel argued. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-05-2025
- Business
- Yahoo
ECB should keep steady hand, hold rates close to current levels, Schnabel says
(Reuters) -The European Central Bank should stop cutting borrowing costs as turmoil in the global economy is fuelling price pressures and inflation was at risk of exceeding the bank's 2% target in the medium term, ECB board member Isabel Schnabel said on Friday. The ECB cut interest rates seven times in the past year as inflation has been rapidly retreating, and policymakers have already started to lay the groundwork for another cut on June 5, taking the deposit rate to 2%. Schnabel, an outspoken policy hawk, poured cold water on those expectations, making an explicit argument for keeping rates unchanged since they are already low enough not to hold back the economy. "Now is the time to keep a steady hand," Schnabel told a conference at Stanford University. "The appropriate course of action is to keep rates close to where they are today – that is, firmly in neutral territory." Financial markets see a 90% chance of a rate cut in June and see another cut or two in subsequent months, indicating that Schnabel's view goes counter to investor bets. The complication for policymakers is that short-term and medium-term inflationary forces are quite different. In the near term, inflation could even dip below the ECB's 2% target given lower energy costs, a strong euro, anaemic economic growth and high uncertainty created by the U.S. administration's trade war, Schnabel argued. But monetary policy affects the economy with long lags and by the time further policy easing really impacts the economy, the drag on inflation may have faded, replaced by quite different forces that push up costs, she argued. Inflation could be boosted by an expected government spending surge, driven by Germany's pledge to boost defence and infrastructure investment. But more importantly, trade fragmentation, a byproduct of U.S.-imposed tariffs, could also push up costs and boost prices. "Over the medium term, risks to euro area inflation are likely tilted to the upside, reflecting both the increase in fiscal spending and the risks of renewed cost-push shocks from tariffs propagating through global value chains," Schnabel said. Schnabel even challenged the argument that U.S. tariffs without European retaliation are net deflationary for the euro area. "Even if the EU does not retaliate, higher production costs transmitted through global value chains could more than offset the disinflationary pressure coming from lower foreign demand, making tariffs inflationary overall," Schnabel argued. Retaliation, as already outlined by the bloc, would only magnify this process and keep pressure on prices further out. By keeping a steady hand, the ECB could buy insurance against a wide range of possible outcomes and this approach would be robust enough to deal with different scenarios, Schnabel argued. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
