European Central Bank (ECB) policymaker Robert Holzmann on Monday watered down his recent call for three further interest-rate increases of 50 basis points in quick succession, reported Reuters.
The news also quotes the Austrian National Bank leader’s two-week-old interview with German business daily Handelsblatt as he mentioned the ECB should raise rates by 50 basis points at each of its next four meetings because inflation was proving stubborn.
While the first of the expected four rate hikes recently gone, the policymaker was asked in an interview on Austrian national broadcaster ORF TV if he stood by that call given recent turbulence in the banking sector, when ECB’s Holzmann said: “I would not rule them out but I would also not say that they will necessarily come either.”
ECB’s Holzmann also mentioned that since his Handelsblatt interview liquidity in the financial system had decreased, referring to banking stocks’ recent fall on fears of a new banking crisis.
“What we are concerned with is fighting inflation,” ECB’s Holzmann said, adding that if deflation or an inflation reduction began because of tightening liquidity, the central bank would no longer need to raise rates or could raise them more gradually.
Asked if UBS Group’s state-backed takeover of Credit Suisse was dangerous because it will create such a big bank in such a small country, Switzerland, he said: “It could become dangerous but it does not have to become dangerous.”
Elsewhere, ECB policymaker Yannis Stournaras spoke on the CNBC while stating that policy will be data dependent from now on. ECB’s Stournaras also said, “European banking system well-equipped with capital.”
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