Robert Holzmann about current developments in monetary policy at his MCI Guest Lecture.

Internationally renowned expert Robert Holzmann, Governor of the Austrian National Bank, provided fascinating insights into the working routines of European national banks at the MCI Livetalk with Markus Weizl, Dean of the Faculty of Economics and Statistics at the University of Innsbruck.

In his talk, he covered the topics of the real economy, the monetary economy and current developments and challenges.

Real Economy

According to Holzmann, in the real economy it is indispensable to prepare analyses and forecasts in order to make monetary policy decisions.

He cites the pandemic as an example. "From a real economy perspective, the pandemic is over," Holzmann explains. The 2008 financial crisis had far worse effects and led to a crisis of highly indebted countries such as Italy or Greece.

This is precisely where the forecasts that Holzmann's team of 80 at the OeNB is in charge of to come up with realistic estimates. For example, the OeNB, but also the European Central Bank ECB, is concerned with developments on the labor market, which is developing but has not yet reached pre-crisis levels, and how labor market participation will affect inflation. This would have massive implications for central bank policy.

Other forecasts are made, for example, for expected tourists, supply bottlenecks or the price development of energy and food.

Monetary economy

Holzmann is a member of the Governing Council, the supreme decision-making body of the Eurosystem. The primary objective of the Eurosystem's monetary policy is to maintain price stability. "We assume that the current rise in inflation is essentially temporary and that inflation will fall again in 2022," Holzmann said.

He and the OeNB are also concerned about negative interest rates and interest rate subsidies and what options exist to avoid inflation.

Current Developments & Challenges

Among other things, Holzmann counts demographic change and how it affects the equilibrium interest rate. This is because increasing savings for retirement or a declining labor force due to low population growth both affect and cancel out the equilibrium interest rate.

Curriculum Vitae Governor Robert Holzmann

1975-1992: University assistant/lecturer and doctorate at the Institute of Economics, University of Vienna
1983-2005: Institute Director, Ludwig Boltzmann Institute for Economic Analysis of Economic Policy Activities, Vienna
1985-1987: Senior Economist, Organisation for Economic Co-operation and Development (OECD), Paris
1988-1990: Senior Economist, International Monetary Fund (IMF), Washington
1992-2003: Professor of International Economic Relations and European Economics, Institute of Economics; Director of the Europa-Institut, both at Saarland University
1997-2009: Sector Director and Sector Board Head, World Bank
2002-2003: Acting Senior Vice President, Human Development Network, World Bank
2009-2011: Research Director, Center for Mediterranean Integration
2011-2018: Honorary Professorship in China, Australia and Malaysia
since 09/2019: Governor of the Oesterreichische Nationalbank and Member of the Governing Council of the ECB