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ECB rates no longer a material drag on growth, Schnabel says
Published by Global Banking & Finance Review®
Posted on February 25, 2025
1 min readLast updated: January 25, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on February 25, 2025
1 min readLast updated: January 25, 2026
ECB interest rates have risen significantly, and the 2.75% deposit rate may no longer restrain euro zone growth, according to Isabel Schnabel.
FRANKFURT (Reuters) - The interest rate that neither slows not spurs euro zone growth has increased "appreciably" in the past two years and it was no longer clear that the European Central Bank's 2.75% deposit rate is still holding back the economy, ECB board member Isabel Schnabel said.
"The natural rate of interest in the euro area has increased appreciably over the past two years, and even more so than what market-based real forward rates would suggest," Schnabel said in a speech on Tuesday.
"It is becoming increasingly unlikely that current financing conditions are materially holding back consumption and investment," Schnabel said in London. "The fact that growth remains subdued cannot and should not be taken as evidence that policy is restrictive."
(Reporting by Balazs Koranyi; Editing by Francesco Canepa)
Schnabel stated that the natural rate of interest in the euro area has increased appreciably over the past two years, more than what market-based real forward rates would suggest.
Schnabel indicated that it is becoming increasingly unlikely that current financing conditions are materially holding back consumption and investment.
Schnabel delivered his speech in London.
He implies that the subdued growth in the euro zone cannot be solely attributed to the current financing conditions.
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