FRANKFURT (Reuters) – European Central Bank policymaker Robert Holzmann said there was no reason to cut interest rates further as they were no longer curbing economic growth in the euro area and inflation continued to decline as expected.
In an interview with Reuters, Holzmann welcomed data published on Tuesday that showed euro zone inflation, including in the closely watched services sector, easing last month.
The data fuelled market bets on a sixth consecutive rate cut at the ECB’s next meeting on April 16, which would take the rate it pays on bank deposits from 2.5% to 2.25%.
But Holzmann, who alone dissented to the ECB’s latest rate cut in March, expressed caution, arguing the economy did not need to be stimulated.
“We had assumed inflation would come down,” the Austrian central bank governor said. “As we are neutral and inflation is converging to target, there is no reason to become accommodative.”
The ECB estimates the neutral rate, which neither stifles nor spurs economic growth, to be in a range between 1.75% and 2.25%, but there was considerable uncertainty about whether that rate could be estimated in real time with any precision.
Consumer price growth in the 20 nations sharing the euro eased to 2.2% in March, just above the ECB’s 2% target, from 2.3% in February, thanks a big drop in energy costs and slowing service inflation.
(Reporting By Francesco Canepa; Editing by Bernadette Baum)
