Keynote speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the CEPR Paris Symposium 2024 hosted by the Banque de France

Paris, 16 December 2024

Monetary policy is at a critical juncture.

Growing confidence in a sustainable decline of inflation towards our 2% target has allowed the Governing Council to remove substantial policy restriction over the past six months. With our decision last week to cut the three key policy rates by a further 25 basis points, the deposit facility rate is now at 3%, one percentage point below its peak.

Today I will argue that, with interest rates approaching neutral territory and with risks to the inflation outlook broadly balanced, monetary policy should proceed gradually and remain data-dependent.

In this way, we can ensure that disinflation does not stall above our 2% target, while avoiding unnecessary weakness in the labour market and the economy at large.

I will also argue that, once price stability has been restored, the…