European Central Bank Rate Cut

VIENNA (Reuters) – ECB policymaker Robert Holzmann stated that a 25 basis point cut at the upcoming rate-setting meeting is conceivable but not definitive.

Investors anticipate that the ECB will continue to lower interest rates through next June, predicting the deposit rate will drop to 1.75% by the end of 2025, which many economists believe could stimulate growth.

Holzmann, also the head of the Austrian National Bank, noted, "As the data currently stands, a reduction of 0.25 percentage points is conceivable (at this month's meeting), not more. But that is not yet decided. It depends on the final data we receive."

However, he also mentioned that the expectation of U.S. President-elect Donald Trump's potential import tariffs is raising inflation expectations in Europe.

He commented, "We have a newly elected U.S. president who is casting a shadow over inflation in Europe. The inflation forecast will probably be driven upwards because of Trump," indicating that the actual impact will depend on the policies he implements.

"Tariffs have two effects. Firstly, everyone becomes poorer because the relative prices of imported goods rise. Secondly, attempts will probably be made to mitigate these effects through government spending, which will put additional pressure on the budget. Both are likely to drive up inflation," Holzmann added.