ECB Vindicates Arch-Hawk Pondering Memories of 1970s Oil Crisis

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(Bloomberg) — One member of the European Central Bank’s Governing Council must be savoring a particular sense of vindication right now.

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Traditionally one of the most hawkish members, Robert Holzmann was calling for up to 125 basis points of tightening already at the beginning of July when official guidance left room for increases of less than half that pace.

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Fast forward two months, deepening turmoil in European energy markets, inflation at nearly five times the ECB’s target and a weakening euro have prompted rate tightening of exactly the magnitude suggested by the Austrian National Bank governor — one of the ECB’s oldest rate-setters.

In an interview last week, Holzmann spoke of his memories of the 1970s oil crises, when he was just starting his career as an economics professor in Vienna. 

“I’m old enough to have had a first-hand experience as a young economist of the 1970s inflation,” Holzmann, 73, said in Alpbach, Austria. “For those who have never seen high inflation they don’t know what it can do.”

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