Current Situation Warrants More ECB Rate Hikes, Holzmann Says
19 March 2023
By Xavier D’Arcy – FRANKFURT (Econostream) – European Central Bank Governing Council member Robert Holzmann said on Saturday that he expected further rate hikes and that the ECB’s terminal rate could be above 4%.
‘I believe that there will be further interest rate hikes’, Holzmann, who heads the Austrian National Bank, told Austrian radio station ORF.
‘Where we are at the moment, I expect more rate hikes’, he said.
Regarding the ECB’s terminal rate, he said that ‘some hope it will stay below 4%, I fear it will go above 4%.’
Last Thursday’s decision by the ECB’s Governing Council to raise rates by a further 50bp ‘was very easy, because there was a very, very, broad consensus that this step had to be taken in view of the high inflation’, he said.
Inflation ‘is much more stubborn than thought, [which is] surprising for some, less so for others’, he said. The stickiness of inflation however was ‘little surprising to those who like to look back in history a bit', he said.
Regarding recent turmoil in the banking sector, specifically the failure of both Silicon Valley Bank and Credit Suisse, he said that ‘both problems are rather special problems.’
‘What happened in 2008 will not be able to happen now. There was no banking supervision then’, he said.