In an interview with Bloomberg TV, ECB Governing Council member Robert Holzmann pointed out that historically, ECB tends to follow Fed’s policy adjustments with a delay, typically around half a year.
“Typically the Fed always in the last few years has always gone first by about half a year so I would assume, ceteris paribus, as things are, that we would also follow with delay,” he stated, indicating a likelihood that ECB would not preempt Fed in cutting its policy rates.
The Governing Council member also highlighted ongoing inflation risks, particularly from geopolitical tensions affecting shipping routes in the Red Sea. Holzmann cautioned that these factors could contribute to persistent inflationary pressures.
He specifically mentioned the possibility of an escalation in the Red Sea conflict affecting oil prices, a scenario that, while slim, poses a real risk to inflation and economic stability.
Holzmann also expressed skepticism towards market expectations for significant policy easing in Eurozone this year. He warned that market bets for 90 basis points of easing “may be much too high”.
