Households and businesses across the 20‑nation eurozone are receiving area now face a clear signal: borrowing is about to become more expensive and is likely to stay that way for years. The warning comes just days after the European Central Bank lifted its benchmark rate by half a percentage point, bringing it to 3.5%. Two of the ECB’s most influential policy hawks went public on Tuesday, insisting that interest rates must still climb higher.
Belgium’s Pierre Wunsch and Austria’s Robert Holzmann spoke to domestic media, saying the fight against inflation is far from over. Their comments echoed remarks made the previous day by their Slovak and Lithuanian colleagues.
Inflation across the currency bloc currently stands at 8.5%, while the ECB’s own forecasts, released last Thursday, show price pressures remaining above the 2% target through 2025. Those projections were prepared before this week’s sell‑off in bank stocks, which has since seen two U.S. lenders fail and Credit Suisse Group encounter fresh difficulties. The ECB has acknowledged that the outlook has grown more uncertain, yet the hawks are not backing off.
Robert Holzmann, speaking to ORF 1 radio in Austria, said, “I do anticipate a few more interest rate increases,” and added that the size of any future hikes would depend on the data. Since last July, the ECB has already raised rates by 350 basis points.
When asked how high the benchmark rate might go, Holzmann replied, “Some of us are hoping it will stay below 4%. It will p” — his sentence was cut off in the original report. Pierre Wunsch, speaking to the Belgian newspaper L’Echo, was blunt: “We know that we need to do more of this.
At what level? That is unclear.
Meeting by meeting will take place.” The practical effects are already being felt. Mortgage rates in Germany, France, Italy and Spain are set to rise further. Corporate loans, which have already become more costly, will tighten access to capital for small and medium‑sized enterprises.
Consumers who have watched grocery bills climb for a year now face higher credit‑card and car‑loan payments. The ECB’s own projections indicate inflation will remain stubbornly above target for another two years, suggesting the current tightening cycle may not peak until well into 2024.
Each quarter‑point or half‑point increase adds pressure to an economy that grew just 0.1% in the final three months of 2022. Banking turmoil complicates the picture. When lenders fail, credit conditions tighten on their own.
The ECB’s rate‑setters must now decide whether the recent bank stress will do some of their work — slowing the economy and cooling prices — or whether it will trigger a full‑blown credit crunch that overshoots the mark. Holzmann and Wunsch appear to be betting that inflation remains the greater threat, a view shared by many market participants.
