European Central Bank Schnabel: Agree with market expectations that the central bank will raise interest rates next

Schnabel, the European Central Bank executive, agreed with investors' bets on the ECB's next rate hike. Schnabel said borrowing costs were already at a level that would remain appropriate for some time barring a new shock, while consumer spending, business investment and heavy government spending on defence and infrastructure would still boost the economy. The German hawk noted that economic and inflation risks were skewed to the upside. She hinted that new growth forecasts could be raised at the December meeting, with analysts expecting deposit rates to remain at 2 per cent for the fourth time. Schnabel is the first ECB policymaker to make clear that borrowing costs are not just at an "appropriate level", as Ms Lagarde and other ECB officials have repeatedly stressed, but have reached a floor. (Jin 10)