The Next ECB Rate Cut May Be Longer in Coming, Austria’s Central Bank Chief Says
ECB Governing Council member Robert Holzmann, governor of Austria’s central bank, stated that the next interest rate cut by the European Central Bank may be delayed due to a recent uptick in inflation. According to Holzmann, the recent 0.2% increase in euro zone annual inflation, surpassing the ECB’s 2% target rate, may slow down the pace of rate cuts. He expressed concerns about an upward trend in some energy prices but also noted that there are alternative scenarios, such as a stronger devaluation of the euro, that could contribute to inflation.
Holzmann, a self-identified hawk on inflation, was also asked about the potential impact of incoming U.S. President Donald Trump’s trade tariffs on economic growth, price pressures, and monetary policy. He predicted that Trump’s tariffs could lead to a general slowdown in growth and create inflationary pressures, more so in the U.S. than in Europe. The extent of the impact would depend on the extent to which the dollar appreciates and the euro depreciates.
