The voices from the European Central Bank (ECB), which deal with the further course of interest rate policy, sound more cautious than recently. At the beginning of March, Austrian ECB Governing Council member Robert Holzmann announced quite briskly that if the core rate of inflation, i.e. inflation without strongly fluctuating prices for energy and food, did not weaken significantly in the first half of the year, he expected three further interest rate hikes of 0.5 percentage points each after March.

Christian Siedenbiedel

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Now Holzmann rowed back a little. "I wouldn't rule out the three rate hikes, but I also wouldn't say they are necessarily coming," the central banker said in an interview. "What has emerged in the meantime is that these crises and relief measures have reduced liquidity in the financial system."

Other members of the Governing Council of the ECB first sought to highlight the stability of the banking system in their countries; most recently, for example, the Spanish ECB Governing Council member Pablo Hernandez de Cos.

According to the plans, the ECB will next decide on a possible further interest rate hike on 4 May. At the US Federal Reserve (Fed), the decision is already due on Wednesday.

While last week the American investment bank Goldman Sachs had attracted attention with the forecast that the Fed would not raise interest rates at all in March in view of the bank quake, the voices that consider at least a small interest rate hike of 0.25 percentage points possible have recently become louder again.

BIS supports central banks' stance

"Against the backdrop of a robust US economy and continued high demand, the central bank cannot settle for a core inflation rate of 5.5 percent in February," said Franck Dixmier, a fixed income expert at asset manager Allianz Global Investors.

"We expect the US Federal Reserve to raise its key interest rate by a quarter of a percentage point on Wednesday," said Jörg Krämer, chief economist at Commerzbank: "In the meantime, the financial markets are pricing in such a step again with a probability of 80 percent."

The still pronounced inflation problem speaks for a further interest rate hike in America. For the liquidity needs of individual American banks, a waiver of a key interest rate hike would not help, says the economist. Here, the Fed is right to rely on another instrument, namely liquidity loans for the affected banks.

The ECB also follows this "separation principle," said the economist: "With higher key interest rates, it wants to restore price stability – it contributes to financial stability by announcing that it will provide sufficient liquidity against collateral if necessary."

Agustin Carstens, the head of the Bank for International Settlements (BIS), also backed the central banks' steps so far to resolve the turbulence: "We fully support all the measures that central banks have taken," he said at a BIS financial conference.

0.25 percentage points at the ECB in May

For the ECB, Goldman Sachs analysts now expect an interest rate hike of only 0.25 percentage points for May – no longer by 0.5 percentage points as before. For the interest rate meeting in June, a small rate hike of 0.25 percentage points could be pending, said Goldman Europe chief economist Jari Stehn.

"The banks are relieving the ECB of some of the work," said Holger Schmieding, chief economist at Berenberg Bank: "The more the banks harden the financing conditions for the economy, the less the central banks have to do it by raising key interest rates." The financial turmoil and the fall in oil and gas prices reduced inflationary pressures, the economist said. This is certainly also indicated by the "doves" in the ECB Governing Council, the representatives of a looser monetary policy.

And Karsten Junius, economist at Bank J. Safra Sarasin, is also convinced: "The voices from the ECB are likely to become more cautious."