Official Suggests ECB’s Policy Divergence from Fed Temporary

European Central Bank Executive Board member Isabel Schnabel downplayed the likelihood that interest rates in the euro zone will take a significantly different path from those in the US.

“So far this hasn’t really played out that much,” Schnabel told a panel discussion Monday in Berlin. “The macro economy is not all that similar. But on the inflation side, it actually doesn’t look all that different.”


Potential divergence between ECB and Federal Reserve policies became a much-discussed scenario after inflation in the US turned out stronger than previously thought. The latest “dot plot” shows officials expect just one cut this year, while investors see one or two more moves in the Eurozone, following a first reduction earlier this month.

“Even though there may be a slight divergence which is temporary, overall I’m not so sure that it’s actually going to happen,” Schnabel said. “I’m not so concerned.”