Austrian Central Bank Governor Robert Holzmann said in an interview with Bloomberg that it is too early to discuss interest rate cuts.
Inflation the prolongation threatens to prevent the European Central Bank (ECB) from lowering interest rates this year, warns the governor of the Austrian central bank Robert Holzmann.
ECB Council member Holzmann said on Monday the news agency Bloomberg's in an interview at the World Economic Forum in Davos, that events in the Red Sea and other geopolitical conflicts could disrupt supply chains and energy markets.
Disturbances may raise the price of goods and energy and thus cause inflationary pressures, which the ECB cannot ignore, according to Holzmann.
Holzmann estimates that the threat posed by Yemen's Houthi rebels may be the start of a wider event that raises prices. According to him, the ECB should therefore not rely on interest rate cuts this year.
The rise in consumer prices in the euro area has clearly slowed down thanks to the ECB's interest rate hikes, and the rate of inflation is already approaching the ECB's two percent target.
Money market investors have priced in market rates for six 0.25 percentage point central bank rate cuts for this year starting in April. Instead, economists generally predict only four corona bills starting in June.
Holzmann said in the interview that expectations are too optimistic and that it is far too early to discuss interest rate cuts.
Also the head of the Bundesbank, Germany's central bank Joachim Nagel said on Monday in an interview with Bloomberg Television in Davos that it is still too early to think about lowering interest rates.
A similar message has previously been communicated by the President of the ECB Christine Lagarde and the central bank's chief economist Philip Lane.
The ECB's economists currently predict that the rate of increase in consumer prices will moderate to two percent in the second quarter of next year and that price pressures will remain high until the end of 2026.
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