ECB’s Holzmann: A Cut in January ‘Not a Foregone Conclusion for Me at All’

20 January 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Robert Holzmann said on Monday that an interest rate cut at the ECB's January 30 meeting was not a given.

In an interview with Politico, Holzmann, who heads the Austrian National Bank, said that ‘[c]utting interest rates when inflation rises faster than anticipated, even temporarily, risks hurting credibility.’

Holzmann said he would enter the discussion about a cut in the Governing Council meeting on January 30 ‘with an open mind’.

‘A cut is not a foregone conclusion for me at all’, he said.

He described himself as ‘a bit more sceptical’ than at the start of the year that inflation would converge to the 2% target by the end of 2025.

‘Since our December policy decision, we have seen changes we could not anticipate, with gas reserves running down much faster than expected due to colder weather, effective closure of the Ukraine gas transit and the risks of energy prices remaining elevated’, he said.

The decline in the exchange rate could have a mixed effect by lowering the impact of potential US tariffs and increasing imported inflation, he said.

Expecting back-to-back cuts in the first half of the year would make sense if there were a ‘situation in which nothing is a threat to the disinflation path’.

‘But if you take account of lingering inflation concerns, the answer is different’, he said.