‘50BP Could Be in the Ballpark Next Time’ for the ECB, Holzmann Says
13 April 2023
By Xavier D’Arcy – FRANKFURT (Econostream) – A 50bp hike remains an option for the European Central Bank in May, depending on market conditions, Governing Council member Robert Holzmann said on Thursday.
In an interview with CNBC, Holzmann, heads the Austrian National Bank, said that ‘50bp could be in the ballpark next time’ for the ECB.
‘The inflation rate that is remains high and particularly core inflation, and if the rest of the economic conditions do not deteriorate, then we need to think about more increases than what we currently have’, he said. However, policymakers should be wary of the impact of recent financial instability on financing conditions, he said.
‘I take the change of the conditions into account, and quite definitely what we experienced with the bank crisis in the US and in Switzerland, this led to changes in the outlook. And if the outlook changes, you have to change your views’, he said.
He would be closely watching core inflation, alongside lending conditions, he told viewers: ‘I think the persistence of core inflation is quite definitely one of the elements which will have to be taken into account […] but it's not the only part of it which matters.’
‘What matters also is the situation on the financial markets. If the situation or the financial market firms up, it becomes more difficult for households and enterprises to take on credit. This needs to be taken into account', he said.
Persistent core inflation was a key concern for central bankers, he said: ‘[If] we see the core inflation continue to creep up like in the US, by 10s of a percentage point […] this persistence is an indicator of remaining watchful and being able and needing to increase rates.’