ECB’s Holzmann: ‘Please Don’t Think That This Is the Last Rate Hike and There Won’t Be Any More’

17 November 2023

By David Barwick – VIENNA (Econostream) – No one should think that monetary policy tightening by the European Central Bank has already reached an end, Governing Council member Robert Holzmann said Thursday.

In an interview with Austria’s Oberösterreichische Nachrichten, Holzmann, who heads the Austrian National Bank, said, ‘Please don’t think that this is the last rate hike and there won’t be any more. Please note that there may still be another rate hike if there are new disruptions...’

If inflation shocks occur, then depending on the outcome of the ECB’s analysis of these, ‘we may yet be forced to raise rates further, in order to dampen the effects on price developments’, he said.

‘We still have a way to go, and this can be seen above all in the fact that core inflation has risen this year compared to the previous year’, he said. ‘This then suggests that headline inflation, where the variable elements are included, is not a very good indicator, but rather we have to look at core inflation...’

Monetary policymakers, he urged, should therefore not ‘say too early that we have won, but rather must be careful and wait and be very vigilant and look very closely at where the inflation is coming from before we say, “Yes, we can start moving interest rates down."’

‘But what we have succeeded in doing, which is very good, is that we have now initiated a decline in inflation that is not associated with a recession, but rather with stagnation, and this stagnation will last for a few more months, half a year perhaps, but it is no recession, and that is a very big success’, he added.