The head of the Austrian National Bank (OeNB), Robert Holzmann, warns against further premature cuts in key interest rates by the European Central Bank (ECB), despite falling inflation: “Inflation is on the right track. But she is not defeated,” Holzmann told the “Süddeutsche Zeitung”.
“I thought the last interest rate cut was right, but that is no reason to assume that further interest rate cuts would automatically follow.” Holzmann is considered an idiosyncratic figure on the ECB Council. He was the only central banker to reject the first key interest rate cut in June with a dissenting vote; he only gave his consent to the second cut in September. His proposal to radically increase the minimum reserve requirements for banks also caused unrest in the committee. The minimum reserve is the amount that banks must hold in their checking account at the central bank and which does not earn interest.
However, Deutsche Bundesbank President Joachim Nagel gave a signal for a rapid further interest rate cut. “I’m definitely open to thinking about whether we could possibly take another interest rate step,” Nagel said in a podcast. The previous interest rate policy had achieved the desired price-dampening effect. The ECB’s next interest rate decision is due on October 17th.
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