VIENNA (Reuters) – It is “conceivable” that the European Central Bank will cut interest rates by 25 basis points at its next rate-setting meeting this month, but not more, ECB policymaker Robert Holzmann said in a newspaper interview published on Wednesday .
Investors expect the ECB to cut interest rates at each of its upcoming meetings until at least next June, and the 3.25% deposit rate is now expected to end 2025 at 1.75%, a low enough level – according to many economist – to start with the stimulation of growth.
“As the data currently stands, I think a 0.25 percentage point cut is conceivable (at this month’s meeting), not more. But that has not been decided yet. As always, it depends on the final data we get,” Holzmann, who heads Austrian National Bank, he told the Austrian newspaper Oberoesterreichische Nachrichten.
However, the general expectation that US President-elect Donald Trump will impose sweeping import tariffs after he takes office in January is increasing pressure on expected inflation, he said.
“We have a US president-elect who is casting a shadow over inflation in Europe. The inflation forecast is likely to be raised because of Trump,” he said, adding that the extent of that effect will depend on the policies Trump actually implements.
“Tariffs have two effects. First, everyone becomes poorer because the relative prices of imported goods rise. Second, it is likely that these effects will be tried to be mitigated by government spending, which will further burden the budget. Both will likely increase inflation,” he said.
