OeNB Chief Against Further Interest Rate Cut
"Since we are at a neutral level and inflation is approaching the target value, there is no reason for an accommodative monetary policy," continued OeNB Chief Robert Holzmann. This refers to measures that stimulate the economy. Key interest rates are considered neutral when they neither slow down nor boost the economy.
OeNB Chief Holzmann warns against further interest rate cut
Holzmann, who was the only one not to support the decision to cut interest rates at the March interest rate meeting, warned of caution: The economy does not need to be stimulated. The next ECB interest rate decision is on April 17. Currently, the financial market estimates the probability at around 80 percent that the Euro central bank will then lower the key interest rate by another 0.25 percentage points. It would be the seventh step down since the ECB switched to an interest rate cut course in June 2024. The deposit rate, the key interest rate in the euro area, would thereby fall to 2.25 percent.
Holzmann also expressed a positive view on the recent inflation data from the Eurozone. According to these, the inflation rate in the 20-country community fell to 2.2 percent in March from 2.3 percent in February. Inflation in the service sector, which has recently been particularly in focus at the ECB, also weakened in March. The ECB aims for 2.0 percent inflation as the ideal value for the economy in the euro area, which is now not far off.
The tariff increases promised by US President Donald Trump should not, from the perspective of France's central bank chief Francois Villeroy de Galhau, endanger the ongoing decline in inflation in Europe. "Trump's tariffs should not significantly affect disinflation in Europe," said the European Central Bank (ECB) council member to the French regional newspaper "Midi-Libre" on Wednesday. Economists refer to the process of gradually decreasing inflation as 'disinflation'.
(APA/Red)
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