Robert Holzmann, a Member of the European Central Bank (ECB), stated that the inflation in May, which reached an all-time high in the Eurozone, was the reason for a 50 basis point increase in interest rates in July.
Holzmann, who is also the Chairman of the Austrian Central Bank and one of the hawkish names of the ECB, stated that if no decisive action is taken, consumer prices will rise.
“A 50 basis point rate hike will show the ECB’s seriousness in the fight against inflation,” Holzmann told Bloomberg via e-mail. The net rate hike signal will also support the currency, the euro. The weakening in the euro is not supportive on the inflation front,” he said.
The ECB plans to raise interest rates, which are at record lows, in an effort to contain inflation, which has exceeded its 2 percent target. The debate among officials has evolved over the amount rather than the timing of the rate hike.