(Bloomberg) -- The European Central Bank’s room for maneuver will be limited if sticky US inflation forces the Federal Reserve to delay monetary policy easing this year, according to Governing Council Member Robert Holzmann.

“I would find it difficult if we move too far away from the Fed,” Holzmann said in an interview in Washington. “If the Fed doesn’t cut rates at all this year, I hesitate to imagine us cutting three or four times.”

Speaking on the sidelines of the IMF and World Bank, Holzmann said the inflation profile in the US is very different to that in the euro area. “I don’t currently see any great danger of inflation in the euro zone gaining momentum, as is currently the case in the US,” he said. But what the Fed does because of high price growth will influence the ECB decisions.

Holzmann is one of the Governing Council’s top hawks and has repeatedly urged caution in lowering borrowing costs too rapidly, citing also global risks such as rising Middle East tensions. Still, even he’s conceded that a move in June is possible. 

“If inflation develops as expected and, above all, the geopolitical problems don’t worsen, there will likely be a majority for an interest rate cut in June,” he said. “However, we must remain cautious, especially with further steps after a possible first step.”

Yet, “if we say that we are data-dependent, we can’t commit already now to a rate cut in June,” he added. “We have to wait and see how the data turns out by then.”

Holzmann also said:

  • “There is still a lot of uncertainty about the inflation outlook — in particular because of the upcoming wage negotiations and geopolitical risks such as the war in Ukraine and the situation in the Middle East. There are many upside risks to inflation that could easily materialize.”
  • “If the oil price were to rise significantly and fuel inflation in the euro area, we couldn’t ignore it and ‘look through’ it. Our mandate is price stability and not output stabilization. In case of doubt, we will also have to accept slightly higher unemployment and endure a mild recession if that is what it takes to achieve our goal.”

--With assistance from Jana Randow.

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