Martin Kocher Says European Economy Can Withstand Rate Hikes

Governing council member of the European Central Bank and chief of the Austrian central bank Martin Kocher stated that the European economy is more resilient than previously anticipated. In an interview with the Austrian newspaper Kurier, Kocher noted stronger economic momentum since the summer, citing a recovery in industry and improving sentiment indicators.

Kocher acknowledged that the economic situation remains fragile and that rate hikes dampen aggregate demand. However, he suggested the economy could withstand higher interest rates if further tightening is required to reach the 2 percent inflation target. He noted that it is preferable to achieve this target without further hikes, but emphasized that necessary moves will be taken while unnecessary ones are avoided.

Regarding future policy, Kocher remained non-committal, citing high uncertainty and price shocks stemming from the situation in the Middle East. He stated that the council will continue to reassess the situation at every meeting.