Holzmann was the only central bank governor to oppose an interest rate cut by the European Central Bank

The governor of the National Bank said: “My interpretation is that inflation has not yet been overcome.” Holzmann pointed to euro zone inflation expectations that were revised higher on Thursday. The ECB now expects an inflation rate of 2.5% in 2024 (previously 2.3%) and 2.2% for 2025 (previously 2%). According to the local central bank governor, inflation is more stable than expected.

Four people familiar with the matter told Reuters that some euro watchers, who typically favor tight monetary policy, expressed regret on Thursday for signaling too clearly an imminent interest rate cut. According to informed sources, Holzmann called for keeping interest rates steady at the European Central Bank meeting on Thursday in Frankfurt.

OeNB Governor and ECB Chancellor Holzmann did not comment on whether and when there could be further interest rate cuts from the ECB. There were no new data on inflation expectations in July. “We will see September data.” He hopes the ECB's next interest rate steps will be data-driven.

The ÖVP and former Chancellor Christian Kern (SPÖ) expressed criticism of Holzmann's monetary policy course. The governor of the OeNB, who sits on the FPÖ ticket, “does not in any way understand the interests of the population,” criticized ÖVP Secretary General Christian Stoker in a live broadcast. Stocker said lowering interest rates would boost economic growth and “ensure significant improvements through cheaper lending, especially in the construction sector.” “Anyone with even the slightest connection to the real economy knows how ugly and damaging this is,” former Chancellor Kern wrote on X (formerly Twitter) about Holtzmann's rejection of interest rate cuts.