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Investing.com -- The interest rate that neither slows nor spurs growth in the euro zone has seen a notable rise in the past two years, according to European Central Bank (ECB) board member IsabelSchnabel. Schnabel stated that the ECB’s deposit rate of 2.75% may no longer be inhibiting the economy.
Schnabel noted in a speech on Tuesday that the natural rate of interest in the euro area has increased significantly over the past two years, even more than what market-based real forward rates would suggest. This observation indicates changes in the economic dynamics of the euro area.
She further stated that it’s growing less likely that the current financing conditions are significantly hindering consumption and investment. Schnabel made these comments in London, adding that the continued subdued growth should not be construed as evidence that policy is restrictive.
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