ECB/Schnabel: We will continue to increase interest rates until core inflation falls

ECB Member of the Board of Directors Isabel Schnabel said on Tuesday that the European Central Bank will continue to increase borrowing costs until it sees core inflation fall sustainably, adding that the market’s expectations for rate cuts are unfounded.

Schnabel supported the ECB’s decision to slow the pace of rate hikes last week, but said it would continue until it sees a sustained decline in core prices, which usually excludes food and energy due to its sharp fluctuations.

Speaking at an event in Frankfurt, Schnabel said: “Based on today’s data, there is no doubt that we need to do more to get inflation back on time to our 2 percent target. We will resolutely raise rates until it becomes clear that core inflation is also falling steadily.”

Schnabel added that interest rates will likely remain high for a long time and that rate cuts some market participants are expecting this year are “unlikely”.