Robert Holzmann, Governor of the Austrian Central Bank, speaks during an event in Vienna, Austria, on Tuesday, September 26, 2023.
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The European Central Bank could defy market expectations and hold off on introducing interest rate cuts throughout 2024, Robert Holzmann, a member of the institution's Governing Council, said on Monday.
Asked about those calling for a first rate cut as early as April, the Austrian central bank governor told CNBC: “I'm afraid these people will be deeply disappointed when they leave Davos.”
Speaking to CNBC's Steve Sedgwick at the World Economic Forum in Davos, Switzerland, he added: “I can't imagine we'll be talking about cuts anymore, because we shouldn't be talking about them. Everything we have seen in the last few weeks points to the opposite direction, so I can assume there will be no cuts at all this year.
Headline inflation in the euro zone rose to 2.9% in December, from 2.4% the previous month, largely due to energy prices. The ECB aims for inflation of 2%.
“Until we see a significant decline towards 2%, we cannot make any announcement at all about when we will cut,” Holzmann said.
In a recent survey by InTouch Capital Markets, Holzmann was ranked as one of the most combative ECB Governing Council members.
He also pointed to the “overarching issue” of geopolitical changes in the Middle East as the war between Israel and Hamas continues and tensions spread to Lebanon's Hezbollah and the Houthis in Yemen.
“Prices can rise from day to day, but there is also a risk of changes in the way we do business, structural changes that take longer but which also pose a risk of price changes in the future . When both come together.”, our current outlook [for] December will get worse and it will take much longer for prices to fall,” Holzmann said.