Inflation could encourage the ECB to tighten policy more quickly, Holtzmann says


Frankfurt — The European Central Bank could tighten policy faster than many would expect, as inflationary pressures could continue, ECB policymaker Robert Holzmann contributed to Eurofi Magazine on Wednesday Said in.

The ECB, which takes place on Thursday, has kept the policy very easy since the coronavirus pandemic began and promised a longer adaptation when it announced a new strategy in July. However, inflationary pressures increased more rapidly in the summer months than many expected.

“It could be possible to normalize monetary policy faster than most financial market experts would expect,” said Holtzmann, Austria’s central bank governor.

Robert Holtzmann, policymaker of the European Central Bank and governor of the Austrian National Bank (OeNB), will attend a press conference in Vienna, Austria, on December 2, 2019. (LeonhardFoeger / Reuters)

Holtzmann said potential price pressures from persistent global supply bottlenecks, labor shortages, stagnant household demand, cost-effective climate change policies, and rising headline inflation settled in expectations. Said he saw.

The ECB is expected to reduce irritation on Thursday, promising a wealth of support over the years to come.

“This does not mean that we will withdraw accommodation prematurely, but that we will need it in a shorter period of time than the market expects,” Holtzmann said.

Holtzmann also said that ultra-simple monetary policy can lead to financial imbalances, adverse effects on distribution and inefficient capital allocation.