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ECB shouldn't take market calm for granted as economy turns for worse: Schnabel

FILE PHOTO: A woman, wearing a protective mask walks past the head quarter of the European Central Bank (ECB) during sunset in Frankfurt, Germany, April 29, 2020, as the spread of the coronavirus disease (COVID-19) continues. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - The European Central Bank should not take the calm in the bond market for granted as the virus-stricken euro zone economy takes a turn for the worse and needs fresh monetary stimulus, ECB board member Isabel Schnabel said on Wednesday.

“Incoming data point to an inversion in the trajectory of the euro area economy,” Schabel said at a banking industry event.

“It would be naive to take the stability of euro area bond markets for granted,” she added.

Schnabel noted however that the cost for banks of a flatter yield curve was growing and the ECB needed to protect the lending channel, a possible reference at new subsidies for the sector via negative-rate loans.

Reporting by Francesco Canepa; Editing by Alison Williams

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