(Bloomberg) — European Central Bank Governing Council member Robert Holzmann said the Federal Reserve’s sway over the world’s top currency gives it an outsized influence that policymakers will take into account.
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“To a certain extent, our data and decisions are naturally influenced by the Fed,” he told Handelsblatt in an interview published Wednesday. “We don’t operate in a vacuum. The Fed with the dollar is, figuratively speaking, the gorilla in the room.”
The ECB is set to cut interest rates by a quarter point on June 6, easing that will diverge from the likely path from the US central bank to keep borrowing higher for longer.
Still, Holzmann, who is among the most hawkish members of the Governing Council, warned against any rushed action.
“First of all, the basic prerequisite for the first rate cut must be met, namely that there is a high probability that we will reach our inflation target by mid-2025,” he said. “If that time comes in June, further steps will certainly follow. But I see no reason at all for us to cut key rates too much too quickly. Every step we take is dependent on the data available at that time. We will have a lot of new data and forecasts in September and December. However that’s hardly the case in July.”
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