(Bloomberg) -- The European Central Bank mustn’t declare victory over inflation prematurely because underlying price pressures remain too high, Governing Council member Robert Holzmann told German newspaper Sueddeutsche Zeitung.
“Inflation is on the right track — but it isn’t defeated,” the Austrian central-bank chief said in an interview published Monday, attributing a “major” part of the recent retreat to falling energy costs.
“If you look at the more important core inflation rate — this is where volatile energy and food prices are excluded — things don’t look so good,” he said.
The remarks from the ECB’s most-hawkish official are unlikely to curb expectations for a third interest-rate cut of the year next week, with price growth now below the ECB’s 2% target for the first time since 2021 and the region’s 20-nation economy faring worse than expected.
Holzmann, the sole dissenter against June’s initial reduction in the deposit rate, backed September’s decrease but said “this is no reason to assume that further interest-rate cuts will automatically follow.”
Addressing the economy, he acknowledged the weakening trend that some of his colleagues have said justifies more rapid monetary easing. But he was more cautious.
“If this is cyclical, there’s a stronger motive to cut interest rates than if the slowdown has structural causes, i.e. a result of a poor political framework,” Holzmann said.
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