The Eurozone is in the face of an economic downturn, but inflation is still too high, so interest rates must continue to rise, a member of the Board of the European Central Bank (ECB) Isabel Schnabel said, according to Report.
“The imminent recession will have a dampening effect on inflation,” Schnabel said. “At the same time, the starting point for interest rates is very low, so it is clear that we need to continue to increase.”
Schnabel did not recognize a recession as a base case for the eurozone, but warned that it might not be avoided in Germany, the bloc's largest economy.
Markets are waiting for the ECB key rate hike in October by 50 or 75 basis points. Schnabel did not reveal the increase she expects, but announced the ECB's readiness to do everything necessary to bring inflation under control.