ECB’s Robert Holzmann says interest rates are unlikely to turn positive in 2020

2019 has officially been the year of interest rates with the United States Federal Reserve (FED) cutting rates three times in a row and the European Central Bank (ECB) deciding in favor of keeping the rates in the negative territory. President Trump applauded the ECB’s decision earlier this year and suggested that FED Chairman, Jerome Powell, considers reducing rates further to zero to weaken the U.S dollar, the strength of which has had an adverse impact on the economy at large.

Investors Are Interested In Seeing If Interest Rates Remain Unchanged In 2020

In the policy meeting in December, the European policymakers reiterated that they don’t yet see the need to uplift the interest rates. The leniency in the monetary policy, they stated, has worked well for the Eurozone in supporting the economy during the times of global slowdown. Speculations about ECB’s policy stance for 2020, however, have been the talk of the currency market in the past few weeks. Investors and traders alike are interested in seeing whether the interest rates are kept unchanged or would the policymakers see it fit to start increasing the rates in the upcoming year.

As of Friday, Robert Holzmann of the European Central Bank, who currently holds the position of Austrian Central Bank’s head, stated that it is unlikely for the monetary policy to get any harsher in 2020. He further added that the complications circling Brexit are likely to weigh in the upcoming year that’ll make it harder for the ECB to think of pushing the rates back into the positive territory.

ECB’s new president, Christine Lagarde, presided her first policy meeting earlier this month in which she announced the rates to remain unchanged at -0.5% that matched the analysts’ forecast. She also commented in the Frankfurt meeting that the majority of the governing council has voted in favor of extending the monetary leniency into 2020.  

PM Johnson Is Unlikely To Extend The Deadline For The EU To Decide On A Trade Deal

Following the Conservative Party’s victory in the UK’s general election on December 12^th, the United Kingdom is set to depart from the European Union on January 31^st. In a statement earlier this month, PM Boris Johnson announced that the government doesn’t plan on giving an extension to the European Union to decide on a trade deal beyond the current deadline of December 2020. Once the period ends, Holzmann commented, new concerns can be expected to rise.

The head of the Austrian Central Bank also reiterated that the ECB is unlikely to increase the interest rates unless the inflation outlook is recorded below, but close to 0.2%. The forecast for the two years after 2020, is currently at 1.4%.