The European Central Bank should not rush to lower interest rates again in the near future, ECB governing council member Isabel Schnabel said.
"We are in a good position," Schnabel told financial news agency Econostream Media, pointing to strong eurozone output and growth data, as well as banks' reports that current interest rates are not putting off borrowers.
"Output continues to improve, and it is impressive that all indicators of future developments continue their upward trend," she added, noting that "the threshold for another rate cut is very high."
Asked whether the recent strengthening of the euro against the dollar could lead to inflation falling below the ECB's 2% target, Schnabel said she was sceptical.
"The fear that exchange rate appreciation will put downward pressure on core inflation is overblown," she stressed, as quoted by AFP.
Schnabel pointed out that many European importers are likely to keep the lower import costs to themselves without passing the savings on to consumers.
The ECB Governing Council member, who recently met with US Federal Reserve Chairman Jerome Powell at an ECB event in Portugal, also said she was "optimistic" that the Federal Reserve will be able to maintain its independence despite President Donald Trump's demands for faster rate cuts.
"One particular advantage of independence is that it reduces risk premiums," Schnabel stressed, warning that Trump's attacks could prove self-destructive.
"By challenging the Fed's independence, risk premiums could rise, which would lead to an increase, not a decrease, in interest rates."
The ECB will hold its next rate-setting meeting on July 24, and most observers expect it to keep rates unchanged after seven consecutive cuts. | BGNES