ECB should stick to half-point hikes for months: Holzmann

Bloomberg

The European Central Bank (ECB) should stick to a plan laid out by President Christine Lagarde and continue raising interest rates in half-point steps, according to Governing Council member Robert Holzmann.
“We reduced the most recent rate move to 50 basis points from 75 under the assumption that we will hold this pace for a while,” Holzmann told the Austrian newspaper Die Presse in an interview. “My idea is that we repeat this step several times, at least in the first half of the year.”
The comments from the Austrian central bank chief, a top ECB hawk, come as some officials consider slowing the pace of tightening as headline inflation eases and energy prices drop, according to people familiar with their thinking.
There’s been pushback against such suggestions in recent days by Netherlands central bank head Klaas Knot and Lagarde herself, who said that “stay the course” is her current monetary-policy mantra.
Holzmann has warned against drawing premature conclusions from slowing price growth, and advised policymakers to take their cue from core inflation.
That measure hit a fresh record last month. The euro area may face a period where falling energy prices push the headline gauge below the underlying reading, Holzmann said.
“We are almost in the so-called neutral area,” he said in reference to the level of interest rates that neither fuels nor damps economic output. “But if core inflation doesn’t clearly move lower, we are forced to move into a more restrictive zone.”