ECB's Schnabel: Agrees with market expectations that the central bank's next move will be a rate hike

[ECB’s Schnabel: Agrees With Market Bets That the Central Bank’s Next Move Will Be a Rate Hike] ECB Executive Board Member Isabel Schnabel expressed agreement with investors betting that the European Central Bank’s next move will be to raise interest rates. Schnabel stated that borrowing costs are already at a level that will remain appropriate for some time—unless a new shock occurs—while consumer spending, corporate investment, and significant government spending on defense and infrastructure will continue to boost the economy. The German hawk pointed out that economic and inflation risks are tilted to the upside. She hinted that new economic growth forecasts may be raised at the December meeting, and analysts expect the deposit rate to be held at 2% for the fourth consecutive time. Schnabel is the first ECB policymaker to explicitly state that borrowing costs have not only reached an “appropriate level” (a point President Lagarde and other ECB officials have repeatedly emphasized) but have already hit the lower bound. ( Jintou )