(Bloomberg) --
The European Central Bank's newest policy maker, Robert Holzmann, added to an outbreak of skepticism over the need for a large stimulus package at next month's meeting.
The 70-year-old economist, who succeeds Ewald Nowotny as governor of the Austrian central bank on Sunday, told public radio station Oe1 that his education, convictions and experience have made him a monetary hawk.
“I'll probably express more criticism toward proposals for further monetary deepening,” Holzmann said in an interview broadcast on Saturday. “An expansion now, when a lot has been done already and the assets of the ECB and the Austrian national bank are already very large, is very unlikely to have further effects.”
With the euro-area economy battered by trade tensions and Brexit uncertainty that has already pushed the manufacturing sector into recession, ECB officials are widely expected to deliver an interest-rate cut on Sept. 12. Speculation that it'll also resume large-scale bond purchases has prompted a backlash from some policy makers though who say that step should only be taken as a last resort.
QE Pushback
Dutch Governor Klaas Knot said in an interview on Thursday that the outlook isn't yet weak enough to warrant the resumption of quantitative easing, Executive Board member Sabine Lautenschlaeger said she opposes it, and Germany's Jens Weidmann said speculation over a large stimulus package “doesn't do justice” to the latest economic data.
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Holzmann said loose monetary policy carries great risks for financial stability by boosting asset prices.
“You can see it in real estate prices, gold prices, or the erratic share prices,” he said. “The long-term effects linked to this can be very negative for Europe, but also globally.”
Holzmann, a specialist on pension systems who's worked at the International Monetary Fund and the World Bank, was named as governor by the nationalist Freedom Party when they were still junior partner in conservative Sebastian Kurz's coalition government. The pact has collapsed since and Austria is now headed for snap elections Sept. 29. Holzmann said that while he's never been a member of the Freedom Party, he's always been close to the group.
To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Paul Gordon, Zoe Schneeweiss
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