ECB’s Holzmann: Second Quarter of 2024 ‘a Bit Soon’ to Expect a First Rate Cut

17 November 2023

ECB’s Holzmann: Second Quarter of 2024 ‘a Bit Soon’ to Expect a First Rate Cut
- Holzmann: Don’t want markets to think there won’t be another rate hike
- Holzmann: Hope rate hikes over, but ‘also ready to step on the brakes again’

By David Barwick – VIENNA (Econostream) – That the European Central Bank would start loosening monetary policy already in the second quarter of next year is unlikely, Governing Council member Robert Holzmann said Friday.

Speaking to media at a Viennese journalists’ club, Holzmann, who heads the Austrian National Bank, said, ‘We would like to avoid having financial markets take positions where they think there won’t be a further rate hike.’

‘We are trying to warn the markets’ not to get ahead of themselves, as they might ‘get burned’, he said, reminding that ‘[t]he last kilometers are the most difficult’ in the effort to restore price stability.

Whatever the US Federal Reserve might do in its jurisdiction, as for an ECB rate cut in 2Q of 2024, ‘here, I would say, that’s a bit soon’, he said.

‘We are trying to communicate, “Please don’t believe that’s the end”’, he said. ‘We all hope it is … but we are also ready to step on the brakes again’ if inflation developments, including ‘elements that come from outside’ such as energy prices, warrant it.

The persistence of relatively high core inflation ‘makes us cautious’, he said. If core inflation doen’t subside, ‘[t]hen we probably have to consider another hike’, he said, as this could threaten the solidity of expectations.