“It looks good,” said Holzmann on Friday evening on ORF’s “ZIB2”. Inflation has fallen. “Therefore, we may be able to expect a rate cut, but it is not certain.”
In order to get record inflation under control, the ECB raised interest rates ten times in a row since July 2022 after years of a zero interest rate policy. Last Thursday, the central bank left the key interest rate unchanged at 4.5 percent for the fifth time in a row. ECB boss Christine Lagarde had indicated the interest rate turnaround in June in mid-March and has now strengthened the signals. “In June we will have a lot more data and new projections,” Lagarde said on Thursday in Frankfurt following the ECB Governing Council meeting. Then the council will decide whether its expectations have been fulfilled.
“You have to be very careful”
Central banker Holzmann warned against having too high expectations. “You have to be very careful. The last mile is the most difficult. That’s why we don’t want to promise more,” he said in the “ZIB2” television interview. Depending on the development of price and wage dynamics up to June and future price expectations, the key interest rates could be reduced by either 0.25 or 0.5 percentage points.
