I think it's just translational. The German says:

Keiner will den nächsten Krieg vermeiden, keiner will sich und seinen Kindern die nachste millionenschlachterei ersparen, wenn er es nicht billigerhaben kann

"No one wants to avoid the next war. No one wants to spare himself and his children the next millionslaughter if he cannot afford it."

The word translated as "holocaust" is millionenschlachterei, literally "millionslaughter." It looks like "holocaust" is just a a translational choice, although the OED cites the word "holocaust" as being used to refer to a mass destruction or slaughter of human beings as early as 1833.

The word used in the original German of the novel is Millionenschlächterei, which is a word that has no direct English translation. Schlächterei is an uncommon word for slaughter-house and combined with Millionen, roughly means the "slaughter of millions" with the implication of a nasty, industrial process. "Holocaust" in this case fits Hesse's intent better. My edition of Steppenwolf uses a revised postwar translation of Basil Creighton's 1929 original which updated the text, so I am not sure if Creighton used Holocaust for Millionenschlächterei in 1929. It is possible though; The Great Gatsby uses the term ("It was after we started with Gatsby toward the house that the gardener saw Wilson's body a little way off in the grass, and the holocaust was complete. ") as did Churchill when describing the Armenian genocide in The World Crisis: The Aftermath ("one administrative holocaust"). So the word was in use before it became indelibly associated with the mass murder of Jews during the Second World War.

/u/brojangles and /u/kieslowskifan have already addressed the specific issue of the translation and what words were used originally. I'll point out that the term "holocaust" had been in use prior to WWII but had a different meaning.

If you look at google's Ngram viewer for the word "holocaust" you'll see that it was in use regularly even back in the 19th and 18th centuries, whereas "the holocaust" is a term that has come into use only since WWII.

Holocaust derives from the Hebrew word for burnt sacrifice. Which is how it was used before WWII. It would have been unusual to refer to something like a genocide as a "holocaust" but readers with some degree of literary or religious sophistication would have understood the meaning. Almost certainly the translation you've read is a post WWII effort.

While I think the answer has been properly addressed, you may be interested to know that the term "holocaustum" was first used in English during Richard the 1st's reign around 1190 when several massacres were perpetrated against the Jews, especially in London. This comes courtesy of Richard of Devizes, a monk and chronicler from the late 12th century:

Now in the year of our Lord's incarnation 1189, Richard, the son of King Henry the Second, by Eleanor, and brother of Henry the Third, was consecrated king of the English by Baldwin, archbishop of Canterbury, at Westminster, in the nones of the third of September. On the very day of the coronation, about that solemn hour in which the Son was immolated to the Father, a sacrifice of the Jews to their father, the Devil, was commenced in the city of London, and so long was the duration of this famous mystery that the holocaust could scarcely be accomplished the ensuing day. The other cities and towns of the kingdom emulated the faith of the Londoners, and with a like devotion dispatched their bloodsuckers with blood to hell

e: This is a translation from middle english btw

Can a historian comment on F Scott Fitzgerald's use of the word in the Great Gatsby? The narrator refers to the murder suicide of Gatsby by Wilson as a holocaust.