European Central Bank (ECB) Executive Board member Isabel Schnabel stressed on Monday in her speech at the CEPR Paris Symposium 2024, hosted by the Banque de France, the importance of a cautious approach to monetary policy. She argued that while interest rates are nearing neutral levels and inflation risks remain broadly balanced, the ECB should proceed gradually and remain focused on economic data.

Despite concerns over potential trade barriers impacting the euro area’s economic outlook, Schnabel highlighted that model-based analyses suggest economic expansion is more likely than recession in the coming year.

Schnabel's remarks followed last week's ECB's decision to lower key policy rates by 25 basis points, matching the focus the ECB has made on a data-driven strategy when making monetary decisions.