ECB rate cut of 25 bps possible, not more, ECB’s Holzmann tells paper
It is “conceivable” that the European Central Bank will cut interest rates by 25 basis points at its next rate-setting meeting this month but not more, ECB policymaker Robert Holzmann said in a newspaper interview published today.
Investors expect the ECB to cut interest rates at every one of its upcoming meetings at least until next June and the 3.25% deposit rate is now expected to end 2025 at 1.75%, a level low enough – in the view of many economists – to start stimulating growth.
“As the data currently stands, I think a reduction of 0.25 percentage points is conceivable (at this month’s meeting), not more. But that is not yet decided. As always, it depends on the final data we receive,” Holzmann, who heads the Austrian National Bank, told Austria’s Oberoesterreichische Nachrichten newspaper.
The general expectation that US President-elect Donald Trump will introduce sweeping import tariffs after he takes office in January is, however, putting upward pressure on inflation expectations, he said.
“We have a newly elected US president who is casting a shadow over inflation in Europe. The inflation forecast will probably be driven upwards because of Trump,” he said, adding that the extent of that effect would depend on the policies Trump actually implements.
“Tariffs have two effects. Firstly, everyone becomes poorer because the relative prices of imported goods rise,” he said.
“Secondly, attempts will probably be made to mitigate these effects through government spending, which will put additional pressure on the budget. Both are likely to drive up inflation,” he added.
Article Source – ECB rate cut of 25 bps possible, not more, ECB’s Holzmann tells paper – RTE
