ECB’s Schnabel urges caution and emphasizes data-driven policy

• ECB’s Schnabel: Incoming data have broadly confirmed the baseline outlook.
• ECB’s Schnabel: Confidence is not knowledge. History will not judge our intentions but our success in delivering on our mandate.
• ECB’s Schnabel: The closer policy rates get to the upper band of estimates of the neutral rate of interest, the more cautious we should be to avoid that policy itself becomes a factor slowing.
• ECB’s Schnabel: The pace of policy easing cannot be mechanical. It needs to rest on data and analysis.
• ECB’s Schnabel: Wage pass-through may be stronger than expected.
• ECB’s Schnabel: It is conceivable, however, that the conditions on which the modal outlook rests do not materialize.
• ECB’s Schnabel: In the alternative scenario, growth in unit labor costs would not come down as quickly as projected.

This article was written by Arno V Venter at www.forexlive.com.