ECB Monetary Policy Member Expects Interest Rate Cuts Later Than Fed

"Fed Has Moved First in Recent Years"

Robert Holzmann, a member of the European Central Bank (ECB) Monetary Policy Committee, said in an interview with Bloomberg TV on the 23rd (local time) that "the ECB policymakers are still far from moving" regarding interest rate cuts. This statement reflects his view that the ECB will not lower rates before the U.S. Federal Reserve (Fed).

[Image source=Reuters Yonhap News]

Holzmann explained, "In recent years, the Fed has always moved about half a year earlier," adding, "Unless there are other reasons for change, the ECB will follow the Fed with a time lag." He also said, "If conditions are right, I am willing to cut rates sharply once and then lower them further."

He pointed to wage increases and tensions in the Red Sea as risk factors that could stimulate inflation (price rises). He explained, "The conflict could continue and suddenly explode." He added, "If an oil tanker runs aground in the Strait of Hormuz, oil prices will soar tremendously," saying, "the possibility is slim, but that is the reality."

Holzmann is the Governor of the Oesterreichische Nationalbank (OeNB). He is considered a hawk (favoring monetary tightening) at the ECB.