ECB’s Holzmann: ‘Risk of Overtightening Seems Dwarfed by the Risk of Doing too Little’
6 February 2023
By David Barwick – BUDAPEST (Econostream) – The European Central Bank’s monetary policy remains subject to a much larger risk from doing too little than from doing too much, according to Governing Council member Robert Holzmann on Monday.
Speaking at the Lamfalussy Lectures Conference of Magyar Nemzeti Bank, Holzmann, who heads the Austrian National Bank, said that although the ECB’s ‘timely response was key in keeping inflation expectations close to our target’, euro area inflation rates ‘remain too high.’
‘Most importantly, people clearly continue to feel the impact of inflation on their daily lives’, he continued. ‘Hence, today, the risk of overtightening seems dwarfed by the risk of doing too little.’
For this reason, he said, ‘monetary policy must continue to show its teeth until we see a credible convergence to our inflation target – a convergence that is also felt by the wider public.’