ECB’s Holzmann: 'Leave it to Your Imagination' Where I Stood on Asset Purchase Pace
11 June 2021
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Robert Holzmann on Friday declined to say whether he had supported the ECB’s decision yesterday to continue conducting asset purchases under the pandemic emergency purchase programme (PEPP) at the higher pace of the second quarter.
In press conference presenting the updated macroeconomic forecasts of the Austrian National Bank, which he heads, Holzmann, referring to a media report that three members of the Governing Council had advocated a reduced pace of purchases at yesterday’s meeting, said, ‘I am not familiar with the report and leave it to your imagination’.
On April 8, Holzmann had said that ‘the decision for the third quarter we’ll make at the end of the second quarter, and hopefully by that time there will be a possibility to reduce again the purchases’, leading to speculation that he might have opposed yesterday’s stay-the-course decision.
As Holzmann was a non-voter at the meeting, according to the ECB’s system of voting rights rotation, his opposition would have been limited to verbal expression in any case.
In general economic terms in the euro area, ‘We see a significant improvement, and that makes us optimistic’, he said. ‘But with respect to inflation we see that if it materialises as expected, the inflation will still lie well below what we have made our target, which ultimately led to … the monetary policy of the second quarter being continued in the third quarter.’
Inflation is nonetheless ‘something that makes every governor on the ECB Governing Council and beyond think’, he said. There is no indication yet that inflation expectations are in acute danger of dis-anchoring to the upside, he said, and one can be optimistic about this.
As for developments in the US, ‘our advantage is that we lag a few months behind the US’, he said. ‘So, we can look at what happens there. No direct comparison is possible because there are different inflation measurements’, so that the latest inflation reading of 5% ‘does not transfer directly to Europe.’
Holzmann reminded that negative rates would not last forever and suggested that Europe could digest small yield increases. The situation would be monitored very closely in the coming weeks and months, he said.
GDP growth in Austria is seen by the central bank at 3.9% this year, 4.2% next year and 1.9% in 2023, while inflation was projected at 2.0% this year and next and 1.8% in 2023.