ECB board member reportedly cautions against back-to-back rate cuts, cites 'risk of easing prematurely'

European Central Bank board member Isabel Schnabel warned against back-to-back rate cuts amid continued inflation risks, Nikkei reported.

While a rate cut in June could be warranted depending on incoming data and projections, things are less certain beyond that, Schnabel told Nikkei.While a rate cut in June could be warranted depending on incoming data and projections, things are less certain beyond that, Schnabel told Nikkei."The path beyond June is much more uncertain.

"After so many years of very high inflation and with inflation risks still being tilted to the upside, a front-loading of the easing process would come with a risk of easing prematurely," the ECB board member added.Markets are also currently facing "very high uncertainty," Schnabel noted, highlighting that market participants have shifted to pricing in around three rate cuts now from six at the beginning of the year.

Geopolitical tensions and policy uncertainty amid a slew of elections worldwide this year also pose risks to euro area financial stability, the ECB said in a"The near-term risk of a deep recession accompanied by rising unemployment – a major source of concern six months ago – is much lower from today's perspective," ECB Vice President Luis de Guindos said in the review.

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