ECB’s Holzmann advocates further rate hike, views economy as stagnating

ECB Governing Council member Robert Holzmann expressed concerns over the inflationary environment, stating, “We’re not yet in the clear when it comes to inflation.” He accentuated the need for continued rate increases, suggesting that barring unforeseen circumstances, there could be a compelling case to “push on with rate increases without taking a pause” come September.

Holzmann emphasized the advantages of achieving the peak rate swiftly, noting, “It’s better to achieve a peak rate faster, which also means we can eventually start going lower earlier.” He highlighted the challenges for markets in navigating a sporadic “stop-and-go rate path.”

Furthermore, Holzmann acknowledged that the ECB has been “somewhat behind the curve” in its endeavors to combat inflation. When quizzed on the possibility of continued rate hikes beyond September, he remarked that once rates reach the 4% threshold, the matter would be up for discussion again.

On the topic of Eurozone’s economic health, Holzmann offered a measured perspective. While conceding that the economy isn’t performing at the anticipated level, he was quick to dismiss fears of an impending recession. He characterized the current economic landscape as one of stagnation, stating, “We’re looking at a stagnating economy.”