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Inflation Could Prompt ECB to Tighten Policy Quicker, Holzmann Says

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FRANKFURT—The European Central Bank could tighten policy sooner than many expect as inflationary pressures could prove to be persistent, ECB policymaker Robert Holzmann said in a contribution to Eurofi Magazine on Wednesday. The ECB, which meets on Thursday, has kept policy ultra-easy since the start of the coronavirus pandemic, and it promised an even longer period of accommodation when it unveiled a new strategy in July. But inflationary pressure have built quicker over the summer months than many predicted. “There is the possibility that we may be able to normalize monetary policy sooner than most financial market experts expect,” Holzmann, Austria’s central bank chief, said. Holzmann said he saw potential upward price pressures from persisting global supply bottlenecks, labor shortages, pent-up household demand, the cost effects of climate change policies, and higher headline inflation getting entrenched into expectations. The ECB is on Thursday expected to reduce stimulus while still promising …

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