European Central Bank (ECB) policymaker Isabel Schnabel said on Friday that “the pace of policy easing cannot be mechanical. It needs to rest on data and analysis.”

Market reaction

Incoming data have broadly confirmed the baseline outlook.

Confidence is not knowledge.

History will not judge our intentions but our success in delivering on our mandate.

The closer policy rates get to the upper band of estimates of the neutral rate of interest the more cautious we should be to avoid that policy itself becomes a factor sl

Wage pass-through may be stronger than expected.

It is conceivable, however, that the conditions on which the modal outlook rests do not materialize.

In the alternative scenario, growth in unit labor costs would not come down as quickly as projected.