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European Central Bank Executive Board member Isabel Schnabel reaffirmed her institution’s guidance that there’ll be no increase in interest rates before the end of net bond-buying.

“Reversing the communicated order of instrument sequencing is not an appropriate policy response,” Schnabel said Wednesday in a speech in Frankfurt. “Maintaining a high volume of asset purchases merely to avoid adjustments in long-term yields in spite of imminent risks to price stability would give way to fiscal and financial dominance.”

Schnabel spoke the same week fellow Governing Council member Robert Holzmann suggested to the Handelsblatt newspaper that rate hikes and net asset purchases should be decoupled. 

“Monetary policy must not be held hostage by fiscal or financial dominance,” Schnabel said. “That is, even if financial markets have become more sensitive to changes in policy, central banks need to find ways to secure price stability without jeopardizing financial stability.”

Schnabel has spoken out against reversing the currently envisaged sequence before. Last month, she said the ECB would risk exacerbating inequality if it were to raise interest rates before ceasing asset purchases.

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