Inflation outlook is very uncertain, ECB Holtzmann tells the paper

Vienna — Robert Holzmann, a member of the ECB Board, said in an interview with the newspaper Die Presse on Sunday that inflation was “significantly above the European Central Bank’s target of about 2%.” There is “uncertainty”.

The ECB has long held the view that inflation will fall from its current highs this year. This is what President Christine Lagarde repeatedly expected on Friday.

Inflation in the euro area reached 5% in December, more than double the ECB’s target, but banks expect it to fall below 2% by the fourth quarter.

“It hasn’t been ruled out yet, but in the end, we don’t know if inflation will stay at a higher level,” Austrian National Bank Governor Holtzmann told Die Presse.

“Therefore, is inflation a mountain or is it becoming a plateau? There is considerable uncertainty about it because it cannot be reproduced well in our model,” he told an Austrian newspaper.

He added that the effects of the second round, such as wage increases, are decisive, adding that, like Lagarde, there are currently no signs of a price-wage spiral, but it depends heavily on this year’s wage negotiations.

“Therefore, there is basically a risk of wage and price spirals, but I believe that workers and employer representatives are acting very reasonably and thoughtfully here,” Holtzman said. Said.

As part of the asset purchase, the ECB can only hold up to 33% of the bond volume in eurozone countries, “very close” to that limit in some countries, but not in Austria, he said.

There are other ways to buy bonds in these countries, such as the European Union’s Next Generation Recovery Fund, but they don’t count towards the 33% figure, he added.