ECB’s Holzmann: No Need to Cut Rates Further to Achieve Price Stability

26 March 2025

ECB’s Holzmann: No Need to Cut Rates Further to Achieve Price Stability
Robert Holzmann, governor of the Oesterreichische Nationalbank, and Pierre Wunsch, governor of the National Bank of Belgium, at the European Central Bank Governing Council meeting in Ljubljana on October 16, 2024. Photo by Andrej Hanžekovič/ECB.

By David Barwick – FRANKFURT (Econostream) – There is no need to reduce interest rates any further to restore price stability to the euro area, according to European Central Bank Governing Council member Robert Holzmann on Wednesday.

In an interview with the Wall Street Journal, Holzmann, who heads the Austrian National Bank, said, ‘We are already currently in neutral territory. You don’t have to become more expansionary in order to arrive at the 2% price target level.’

Holzmann, who was the lone Council member to abstain from supporting the rate cut earlier this month, warned that ‘[i]f inflation re-emerges, we would lose our credibility.’

‘There is a need to be cautious in reducing the interest rate too much’, the newspaper quoted him as saying.

His March 6 abstention was motivated by the view that ‘[i]f you say the rate remains still restrictive, that means we will cut next time’, he explained.

‘My point was, if you drop the “restrictiveness”, then I can come along’ with the rest of the Council, he said. ‘Otherwise, I will abstain. That’s all.’