R. Holtzman (ECB): Rising interest rates to send a clear message to fight inflation

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European Central Bank (ECB) policymaker Robert Holtzmann told an Austrian newspaper that the bank could send a clear message to fight inflation by raising interest rates before the end of the bond-buying program, Reuters reported.

The ECB has kept interest rates stable this month and will not rush to raise them, President Christine Lagarde said on Thursday.

Holzmann, the governor of the central bank of Austria, supported the decision of the majority of the ECB, as reported by the newspaper Krone, but added: “The bond market system is difficult for citizens to understand. An increase in interest rates would be a message that “Everyone would understand.”

In an interview with Krone published on Saturday, he said the eurozone economy would be in a “wonderful growth course” if it were not for the war in Ukraine.

Asked if he was concerned about the high level of debt in some countries, he said: “This issue is being taken very seriously, but, as is well known, there are different ways to look at it.”

A simple cut in government spending would not be enough without also structural changes, he said, noting the challenge of promoting growth that could create sufficient funding and at the same time fight the climate crisis.

“This transition, even more so in the midst of a crisis, is costly. A lot of money. It makes sense to develop new renewable energy sources, but this is not possible without money,” he said.

Holtzman expects inflation to fall to the 2% target in the medium term, otherwise appropriate interest rate measures will have to be taken.

Source: Capital

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