There’s no easy way of getting euro-area inflation back to the European Central Bank’s 2% target, according to Governing Council member Robert Holzmann.
(Bloomberg) — There’s no easy way of getting euro-area inflation back to the European Central Bank’s 2% target, according to Governing Council member Robert Holzmann.
“Labor market and climate change are two major current and future drivers for us, which will make it very, very difficult I think to go back to the 2%, or if it happens then with a recession which goes beyond what we currently envision,” Holzmann said. “I hope this won’t happen, but I don’t see at the moment the mechanisms to avoid these price pressures and hence the capacities to move quickly to the 2%.”
The Austrian central bank chief, who is in Marrakech attending meetings of the International Monetary Fund and World Bank, is among the most hawkish rate setters at the ECB. The central bank’s most recent economic forecasts — published in September — suggest consumer-price growth will return to target in the second half of 2025.
“One claims that the projections models have improved and so they have been more correct — I’m not so sure about this one,” Holzmann said, adding that models don’t properly reflect structural changes. Projections for “one year — fine, but what happens in two or three years based on these models, I’m always rather cautious.”
–With assistance from Alexander Weber.
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