The European Central Bank must still raise interest rates significantly as broad disinflation has not yet started, even if overall price growth has been declining quickly, ECB board member Isabel Schnabel said in a Twitter Q&A on Friday.
When asked if that could mean 50 basis points in May as well, she said this would depend on incoming data.
But underlying price growth appears to be stubbornly high leading to fears that price growth could get stuck at levels above the ECB's 2% target, partly due to quick nominal wage growth. She acknowledged that rate hikes will lower economic growth but a recession is not certain and a "soft landing" was still possible.
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