Banking
ECB rate cut of 25 bps possible, not more, ECB’s Holzmann tells paper
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VIENNA (Reuters) – It is “conceivable” that the European Central Bank will cut interest rates by 25 basis points at its next rate-setting meeting this month but not more,
VIENNA (Reuters) – It is “conceivable” that the European Central Bank will cut interest rates by 25 basis points at its next rate-setting meeting this month but not more, ECB policymaker Robert Holzmann said in a newspaper interview published on Wednesday.
Investors expect the ECB to cut interest rates at every one of its upcoming meetings at least through next June and the 3.25% deposit rate is now expected to end 2025 at 1.75%, a level low enough – in the view of many economists – to start stimulating growth.
“As the data currently stands, I think a reduction of 0.25 percentage points is conceivable (at this month’s meeting), not more. But that is not yet decided. As always, it depends on the final data we receive,” Holzmann, who heads the Austrian National Bank, told Austria’s Oberoesterreichische Nachrichten newspaper.
The general expectation that U.S. President-elect Donald Trump will introduce sweeping import tariffs after he takes office in January is, however, putting upward pressure on inflation expectations, he said.
“We have a newly elected U.S. president who is casting a shadow over inflation in Europe. The inflation forecast will probably be driven upwards because of Trump,” he said, adding that the extent of that effect would depend on the policies Trump actually implements.
“Tariffs have two effects. Firstly, everyone becomes poorer because the relative prices of imported goods rise. Secondly, attempts will probably be made to mitigate these effects through government spending, which will put additional pressure on the budget. Both are likely to drive up inflation,” he said.
(Reporting by Francois Murphy; Editing by Shri Navaratnam)
The European Central Bank (ECB) is the central bank for the eurozone, responsible for monetary policy, managing the euro, and maintaining price stability across the member countries.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the amount borrowed or saved, typically set by central banks.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power, often measured by the Consumer Price Index (CPI).
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic goals such as controlling inflation and stabilizing the currency.
Economic growth is the increase in the production of goods and services in an economy over a period, often measured by the rise in Gross Domestic Product (GDP).
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