Latest news with #RobertHolzmann
Irish Times
3 days ago
- Business
- Irish Times
ECB hawk calls for rate cut pause until September amid trade tensions
The European Central Bank should pause further interest rate cuts until at least September, one of its most hawkish policymakers has said, warning that 'we should keep our powder dry' given the simmering European Union -US trade war. Austrian central bank governor Robert Holzmann said he saw 'no reason' for the European Central Bank to lower rates at its June and July meetings. 'Moving [interest rates] further south would be more risky than staying where we are and waiting until September,' Mr Holzmann said, arguing that a further rate cut at this stage was likely to have 'no effect' on economic activity in the euro zone. Mr Holzmann's hawkish comments point to disagreement among ECB rate setters, as they weigh how to approach Donald Trump's trade war ahead of their next meeting on June 5. READ MORE The US president last week threatened to impose 50 per cent tariffs on imports from the European Union (EU) from June 1st but has since agreed to delay until July 9th to allow time for talks with the bloc. Fellow ECB hawk Isabel Schnabel warned earlier this month that the trade conflict could fuel inflation and limit the central bank's room for manoeuvre. [ Why ECB's latest interest rate cut was a no-brainer Opens in new window ] In contrast, Belgium's central bank governor Pierre Wunsch – previously also known for his hawkish views – earlier this month called for the ECB to be ready to cut rates to 'slightly below' 2 per cent this year. Both Mr Wunsch and Ms Schnabel spoke before Trump issued his 50 per cent tariff threat on Friday, which marked a significant escalation in the trade feud. Policymakers in Frankfurt have lowered their key deposit facility rate seven times since last June, bringing it down from 4 per cent to 2.25 per cent at their previous meeting in April. 'We're at a critically low level of housing stock' for buyers and renters Listen | 33:06 Given that euro zone inflation is hovering close to the ECB's medium-term target of 2 per cent while growth forecasts are bleak, investors and analysts expect another quarter-point cut at the central bank's June meeting. Markets have also priced in at least one further cut later this year. Mr Holzmann argued that economic activity in the currency area was being held back by 'extreme uncertainty' rather than restrictive monetary policy. 'Key economic decisions by market participants are delayed and not taken. [ ... ] People want to wait.' In such a context, a reduction in interest rates would not do much – if anything, he argued. [ Further ECB rate cut in June all but guaranteed Opens in new window ] The Austrian central bank governor, whose term will expire later this year, also said that borrowing costs in the euro area have come down so much over the past year that they were no longer slowing down economic activity and were potentially even stimulating growth. He views the 'neutral' rate of interest – where borrowing costs are doing neither – at somewhere between 2.5 per cent and 3 per cent. 'Most if not all of the recent estimates on [the neutral rate of interest] for Europe point to quite a strong increase since the beginning of the year 2022. We are already at least at the neutral level.' Germany's planned €1 trillion debt-funded spending plans were another reason for the ECB to maintain 'a steady hand', Mr Holzmann said. If implemented by Germany's new chancellor, Friedrich Merz, they should boost economic growth in the currency area. Mr Holzmann described Mr Merz's plan as 'a fiscal shock to Europe, which will help us to turn the current development around'. While Mr Holzmann acknowledged that 'many' of the 25 other members of the ECB governing council were 'a bit' more dovish than him, he stressed that he did not feel 'isolated at all', arguing that 'a number of people' on the decision making body were also 'sceptical' about additional interest rate cuts. – Copyright The Financial Times Limited 2025
Zawya
3 days ago
- Business
- Zawya
Euro zone bond yields edge down on French inflation data, tariff concerns
Euro area bond yields dropped on Tuesday after French inflation data came in weaker than expected, while concerns about the potential adverse economic impact of U.S. tariffs persisted. Borrowing costs edged up on Monday as the U.S. backed away from its threat to slap 50% tariffs on European imports, before falling later in the session in the wake of U.S. Treasury market worries about the effects of erratic U.S. trade policy. French inflation fell to its lowest level since December 2020 in May, driven by a sharper decline in energy prices and a slowdown in service costs. Germany's 10-year government bond yield, the euro area benchmark, dropped 2.5 basis points (bps) to 2.54% after hitting 2.513%, its lowest level since May 8. U.S. stock index futures jumped on Tuesday after tensions between the United States and the European Union cooled, favouring some selloff in safe-haven bonds. On the euro zone front, markets await more inflation data from Germany, Italy and Spain on Friday. The normalisation of interest rates in the euro zone is probably not complete, European Central Bank (ECB) policymaker Francois Villeroy de Galhau said on Tuesday. However Austrian central bank governor Robert Holzmann, seen as a hawk, called for a pause in rate cuts until September. Markets price in a 90% chance of an ECB 25 bps rate cut next week. They also indicated a depo rate at 1.67% in December, which implies an additional easing move and an around 30% chance of a third cut by year-end. The depo rate is currently at 2.25%. Data showed that the euro zone economic sentiment improved in May. The benchmark 10-year U.S. Treasury yield was down 5 bps to 4.46% in London trade. Analysts mentioned a possible regulatory relief which could favour more demand for bonds, driving yields lower, and concerns about rising public deficit. Market participants expect U.S. regulators to revamp the "supplementary leverage ratio", reducing the amount of cash reserves banks must hold and encouraging them to play a larger role in intermediating Treasury markets. A tax and spending bill which would saddle the U.S. with more debt now heads to the Senate, with several senators saying they would seek substantial changes over what is likely to be weeks of debate. Italy's 10-year yield rose 0.5 bps to 3.56%, with the gap between Italian and German yields at 99.50 bps, after reaching 90.90 bps last week, its lowest level since March 2021. (Reporting by Stefano Rebaudo; Editing by Hugh Lawson)
Bloomberg
25-04-2025
- Business
- Bloomberg
ECB's Holzmann Sees Disinflationary Impact From US Tariffs
European Central Bank Governing Council member Robert Holzmann said the fallout from the US tariff announcements will probably weigh on consumer prices in the euro zone rather than create a new bout of inflation. The hawkish Austrian policymaker also said the lack of clarity over the situation means the ECB's next interest-rate decisions are 'completely open.'
CNBC
24-04-2025
- Business
- CNBC
We have not seen this much uncertainty for years, Austrian central bank governor says
Austrian Central Bank Governor Robert Holzmann discuss the impact of global uncertainty on European inflation, monetary policy and growth.
CNBC
24-04-2025
- Business
- CNBC
European Central Bank's Holzmann says rate cuts must wait for more tariff certainty
Austrian central bank chief Robert Holzmann on Thursday said euro zone interest rates should be held until more clarity emerges on the path of U.S. tariffs and European Union countermeasures. "We have not seen this uncertainty now for years... unless the uncertainty subsides, by the right decisions, we will have to hold back a number of our decisions, and hence, we don't know yet in what direction monetary policy should be best moved," Holzmann told CNBC's Carolin Roth in an interview at the IMF World Bank Spring Meetings. Holzmann is widely viewed as one of the most hawkish voting members of the European Central Bank, in favor of a slow approach to easing monetary policy as inflation eases. The ECB's Governing Council voted unanimously to cut by a quarter percentage point at its April meeting, its seventh reduction in the current cycle, but Holzmann confirmed he took the decision with caution and had seen a need to wait for more data. He told CNBC that there was a "broad consensus" around lowering rates, but some disagreement at the margins. "My assessment is that at this time, it wasn't clear yet to what extent [tariff] countermeasures were being taken. Because with countermeasures in Europe, prices may have increased. Without countermeasures, quite likely the price pressure is downward. And for the time being, we don't know yet the direction," he said. Under President Donald Trump's market-rocking tariff policies, the European Union is facing blanket 20% duties on its U.S. exports, along with the 25% U.S. tariffs on aluminum, steel and autos that most countries have been slapped with. Trump on April 9 announced a 90-day pause on the universal tariffs, prompting the EU to pause its own initial tranche of counter measures while negotiations take place. Holzmann told CNBC that while various scenarios remained possible with regard to prices and the movement of rates, for the time being the direction was downward. "Before looking at data in detail, the question is, what kind of political decisions will be taken? Is it that we will have some tariff increases? Is it that we will have strong tariff increases? Is it that we will have retribution by high counter tariffs?" "This high uncertainty, what we currently have, you can find everywhere. You can find it at the level of growth. You find it at the level of exchanges, in financial markets indicators. So at the moment, we look at everything and try to make sense out of it. But for the time being, it's too early to say, this is the data to look at. We need the decisions." In an interview with CNBC earlier this week, European Central Bank President Christine Lagarde said monetary policy had done its job and the disinflation process in the euro zone was "nearing completion." "We need to continue checking the data," she added, saying the central bank would be "data dependent to the extreme." Overnight index swap pricing on Thursday suggested market expectations for another 25-basis-point rate cut at the ECB's next meeting in June, taking its key rate to 2%, and another cut of the same size before the end of the year. "There may be further cuts this year, but the number is still outstanding," Holzmann said Thursday.
