ECB’s Holzmann: Will Tighten Monetary Policy Well into Restrictive Territory
16 December 2022
By David Barwick – FRANKFURT (Econostream) – The European Central Bank will tighten its monetary policy well into restrictive territory, according to Governing Council member Robert Holzmann on Friday.
At a press conference of the Austrian National Bank, which he heads, Holzmann said that based on the discussions during this week’s Council meeting, ‘all of us on the Council were of the opinion that we should take correspondingly energetic steps and that these steps require some time or some steps to be implemented.’
‘That raised the question of whether one should go with a dovish 75 or with a hawkish 50 … we decided then on 50 [basis points], but also with the announcement that that will continue for some time’, he said. ‘Yes, it is the firm intention to advance well into the area of restrictive policy if it is necessary. That means that you can set the terminal rate high.’
Holzmann denied being dissatisfied with the decision, saying that it had been well understood and the message of it well received, so that for him it was the equivalent of the 75bp hike he would have initially favoured.
As for the ECB’s effort to reduce its balance sheet, this will depend on other countries’ experience with quantitative tightening, whilst ‘a second point is the technical details’, he said. ‘It is important to us to unsettle the markets as little as possible.’