OeNB Chief Kocher Advocates for "Cautious Policy" in ECB Interest Rate Decision

In light of existing uncertainties due to the trade conflict with the USA and the differing inflation rates in the Eurozone, it is important not to make an interest rate move "that might have to be reversed relatively soon," said OeNB Chief Kocher in an interview with APA.

OeNB Chief Kocher: Short-term "Back and Forth" on Interest Rates Not the Right Path

Whether he will advocate for maintaining the current interest rate or a reduction at the upcoming council meeting on September 11, Kocher did not disclose to APA. He only mentioned: "There are different opinions on the current interest rate level. However, some council members have expressed caution for the coming weeks, and I certainly share that," said the newly appointed central bank chief. A short-term "back and forth" or "up and down" of interest rates is certainly not the right path.

Observers See Further ECB Interest Rate Pause as Likely

After a series of seven consecutive interest rate cuts, the ECB hit the pause button in July and kept its deposit rate at 2.0 percent. The ECB's fundamental goal is to keep the inflation rate close to 2 percent to ensure price stability. At the same time, the current struggling economy should not be stifled by interest rate policy. In Eurozone country Austria, inflation is significantly higher than the Eurozone average. The determination of the further monetary policy course will heavily depend on the economic data from the Eurozone expected these days, said Kocher, who joined the National Bank on an ÖVP ticket. Among observers, another interest rate pause in September is considered likely.

If the ECB were to focus solely on Austria, "a policy that is not too expansive would be helpful." However, the former ÖVP Minister of Economy and Labor points out that it is about the difference between the inflation rate in the Alpine Republic and the Eurozone, and therefore further economic policy measures are needed to combat the relatively high rate in Austria. Monetary policy decisions alone will not solve the national inflation problem.

Price Stability for OeNB Chief Kocher as "Clear Goal"

Regarding his approach to monetary policy, price stability is "the clear goal" and therefore Austria's previous line under him "will not change significantly," unless the overall situation develops in a completely different direction. Predecessor Robert Holzmann, once appointed to the National Bank with the support of the FPÖ, was considered a "hawk" in the council, meaning a proponent of a restrictive monetary policy focused on combating inflation.

Austria is traditionally considered more of an advocate of such tight monetary policy. However, Kocher does not see himself in the camp of the "hawks," nor in that of the "doves," the supporters of an expansive monetary policy with low interest rates and cheap money for the economy. The classification is outdated and too simplistic for him in light of the complex subject matter, argued the new National Bank Governor.

OeNB Chief Kocher for "Consistent Monetary Policy"

For Kocher, monetary policy must be "consistent and long-term oriented." The goal is to make decisions as data-driven as possible. He does not want to rule out representing a "minority opinion" in the ECB Council when he deems it necessary. "If you are convinced of a policy, it must be so." However, he fundamentally places high value on unanimity in the committee, as this is also important for the impact externally. Ex-National Bank Chief Holzmann, who held the top position as Austrian Central Bank Chief and member of the ECB Council until the end of August, had repeatedly voted against the majority opinion in interest rate decisions.

(APA/Red)

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