ECB’s Holzmann: Cutting Rates Further Riskier Than Pausing Until September

27 May 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Robert Holzmann said on Tuesday that cutting interest rates further would be riskier than pausing until September.

In an interview with the FT, Holzmann, who heads the Austrian National Bank, said that ‘[m]oving further south would be more risky than staying where we are and waiting until September.’

Another rate cut now would likely have ‘no effect’ on euro area economic growth, he said.

It was ‘extreme uncertainty’ that was holding back growth in the Eurozone, not restrictive monetary policy, according to Holzmann.

Rate cuts would not have an effect given that ‘[k]ey economic decisions by market participants are delayed and not taken […] People want to wait’, he said.

Interest rates had been lowered so much in the past year that they were no longer a drag on the economy and could even be stimulating growth, he said.

Holzmann estimated the neutral rate to be between 2.5% and 3%.

‘Most if not all of the recent estimates on [the neutral rate] for Europe point to quite a strong increase since the beginning of the year 2022’, he said. ‘We are already at least at the neutral level.’