Holzmann (ECB) pleads for a deposit rate of 0% by the end of the year | Photo credits: OeNB
FRANKFURT, March 29 (Reuters) – The European Central Bank (ECB) should cut its deposit rate to 0% by the end of the year or face steeper hikes in 2023, Robert Roberts said on Tuesday. Holzmann, one of the members of the institution’s Board of Governors.
In an interview with the German newspaper Börsen-Zeitung, the Governor of the Bank of Austria, who was the first to explicitly support market expectations for a 50 basis point hike in the ECB deposit rate by its December meeting, warns of lasting inflation.
The ECB deposit rate is currently -0.5%. “A rise in the deposit rate to zero by the end of the year would be important for monetary policy because it increases optionality,” he explains.
“If, towards the end of the year, we were to find that inflation would remain very high for a longer period, we would be forced to tighten monetary policy further and raise interest rates more significantly,” he adds.
For Robert Holzmann, the ECB, which is aiming for inflation of 2% in the medium term, should eventually raise its key rate between 1% and 1.5% to at least normalize its policy after years with its foot on the accelerator. (Report Francesco Canepa; French version Claude Chendjou, edited by Jean-Stéphane Brosse)