(Bloomberg) — The European Central Bank could consider waiting longer before its next rate cut if inflation risks from energy prices or a stronger depreciation of the euro materialize, according to Governing Council member Robert Holzmann.
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“It could be the case that we take more time before lowering rates again,” the Austrian National Bank’s governor said in an interview with the Kurier newspaper published on Saturday. “It’s true, some energy prices are trending upwards again. But there are also other scenarios for how inflation could return, such as a stronger depreciation of the euro.”
Asked about the prospect of rate hikes returning, Holzmann, who’s considered among the most hawkish members of the ECB’s policy-setting panel, said: “I don’t see rate increases at the moment.”
The ECB has signaled more rate reductions are likely with inflation approaching a 2% target and the euro area economy struggling to gather momentum. Policy makers have been assessing the impact of more active trade policy in the US after Donald Trump’s inauguration as president in January.
“One probable scenario is that Trump’s tariffs lead to a slowdown in growth overall, but also create inflationary pressure,” Holzmann told Kurier. “How strong the effect will be depends crucially on whether and to what extent the dollar appreciates and the euro weakens.”
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