FRANKFURT (Reuters) – European Central Bank policymaker Robert Holzmann backs keeping interest rates unchanged next month as higher trade tariffs and more government spending raise the risk of a new surge in inflation, he said in an interview published on Friday.
The ECB cut rates for a sixth time last week and sources told Reuters the chances of a pause next month were rising along with uncertainty about the economic outlook in Europe and abroad.
Holzmann, who alone refused to back the rate reduction last week, hopes more of his colleagues on the Governing Council will join him at the April 17 meeting.
“I am in favour of a possible interest rate pause in April,” the Austrian central bank governor told Der Platow Brief, a German financial newsletter.
“The next meeting will be about how many Council members who have so far supported the cut but have expressed concerns can then decide against a further interest rate cut,” he added.
He said the ECB could still resume lowering borrowing costs in the summer, perhaps as early as the June meeting when it publishes new economic projections.
Equally, he said rates might need to rise if tariffs, greater spending on defence or a relaxation of Germany’s “debt brake” result in higher inflation.
“In that case, monetary policy would likely have to go in the other direction,” said Holzmann, whose term of office runs out in August.
(Reporting By Francesco Canepa; Editing by Andrew Heavens)
