Frankfurt Over the weekend, European Central Bank (ECB) President Christine Lagarde pledged that “we will do whatever it takes to bring inflation back to 2%”. In an interview with the Handelsblatt, the governor of the Austrian central bank, Robert Holzmann, made it clear what that could mean. Holzmann only expects a very slow decrease in price pressure in the euro area.
For this reason, the ECB Governing Council member is in favor of further significant interest rate hikes. He calls for interest rates to be raised by 50 basis points at each of the next four meetings. The key interest rate in the euro area is currently three percent and the deposit rate is 2.5 percent.
Holzmann believes that a restrictive level of interest rates that would slow down the economy would only be reached from a deposit interest rate of four percent. “If we want to bring inflation back to two percent in the foreseeable future, we have to take restrictive action.” The next interest rate decision is scheduled for March 16.
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