Holzmann recalled that, back in the 1960s, the FPÖ was the first party to back Austrian membership of the European Economic Community, which evolved into the EU. In this respect, frequent comparisons to the Alternative for Germany (AfD) party, which started out as a Euroskeptic party and turned into political home for right-wing extremists, may be misguided, Holzmann argued.
However, the FPÖ used much the same rhetoric and ideas as the AfD in last year’s election, calling for the “remigration” of immigrants and the restriction of social benefits to Austrians citizens. It also campaigned on a platform of stopping “EU warmongering,” by ending aid and weapons deliveries to Ukraine.
Austria, of course, is far from alone in Europe in having messy domestic politics. Holzmann bemoaned a “lack of leadership at European and national level” and identified “ideological fragmentation” as a key risk for the continent, undermining unity at a time when it is most needed. European interests are not a priority of incoming United States President Donald Trump, he noted.
Inflation still not dead
In such an environment, he said, it’s even more important that monetary policy remain credible and not to rush into more interest cuts before it is clear that the battle against inflation has been won.
With the economy struggling and inflation well down from its 2022 peak, the European Central Bank is widely expected to cut interest rates by a quarter-point at its January meeting, in what would be the fifth reduction since June 2024.
Holzmann, however, reminded that the ECB’s decisions are data-driven and the latest data showed inflation rising to “well above” 2 percent in December and will likely show the same for January. “Cutting interest rates when inflation rises faster than anticipated, even temporarily, risks hurting credibility,” he warned.
