Interest rate cuts a credibility risk, ECB warned

Berlin — The European Central Bank risks hurting its credibility if it cuts interest rates when inflation rises faster than anticipated, even temporarily, warned ECB policymaker Robert Holzmann in an interview with Politico published on Monday.

The latest data showed inflation rising to “well above” 2% in December and is likely to show the same for January, he said.

The ECB governing council member, who is widely regarded as a hawk on inflation, added that he would enter the discussion about a rate cut scheduled for this month with an open mind.

“A cut is not a foregone conclusion for me at all,” he said.

Reuters