BRUSSELS (Reuters) -European Central Bank interest rates are in a “good place” now despite an expected slowing of inflation because price growth is likely to return to the ECB’s target of 2% over the medium term, ECB’s Executive Board Member Isabel Schnabel said.
Schnabel told a seminar the expected decline in euro zone inflation, which the ECB forecasts at 1.6% in 2026, was a temporary phenomenon, due to energy price effects and the stronger euro exchange rate.
“It is a clear case of looking through temporary deviations,” Schnabel said.
The ECB has cut rate eight times over the last year, most recently in June, setting the deposit rate at 2%, but some investors expect the bank to make one more cut to 1.75% before the end of the year.
(Reporting by Jan Strupczewski)
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