Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Shogo Akagawa and Takerou Minami on 13 May 2024

17 May 2024

The market sees a rate cut in June for sure. How fast should things move beyond June?

Depending on the incoming data and our new Eurosystem staff projections, a rate cut in June may be appropriate. But the path beyond June is much more uncertain. Recent data have confirmed that the last mile of disinflation is the most difficult. The disinflation process slowed down significantly after most of the supply-side shocks had been reversed and it’s proving quite bumpy, and this appears to be a global phenomenon. In the euro area, part of this is due to base effects and to the reversal of fiscal measures. But more importantly, the part of inflation that has become entrenched through second-round effects is proving more persistent. Given the high uncertainty about the inflation outlook, we should give ourselves sufficient time to assess how the…