8 Jul. () –
The president of the Netherlands Central Bank and member of the Governing Council of the European Central Bank (ECB), Klaas Knot, said on Monday that he agrees with market predictions that take for granted one or two interest rate cuts this year.
“I fully agree with the tone we have adopted and with the current market expectations regarding future rate cuts,” Knot explained in an interview with the newspaper ‘Handelsblatt’ reported by Europa Press.
The Dutchman has argued that this position is conditional on wage, business profit and productivity data evolving in line with the ECB’s projections.
Knot has ruled out a reduction in the price of money at the next meeting of the ECB’s Governing Council scheduled for July 18, although the September meeting will be “really open.”
He also pointed out that as long as interest rates are above 3%, monetary policy will remain at restrictive levels, something that, he warned, will continue to be the case in the “immediate future.”
Knot also described the disinflation process as “well established” and said that this is a phenomenon that will continue “ongoing,” although he urged the pan-European issuing institute to remain “vigilant” given that the upward risks for inflation still persist.
In any case, the ECB member is “comfortable” with the progress against inflation, which slowed to 2.5% in June.
“We should not deviate from our medium-term guidance if inflation turns out to be a bit higher than expected in some of the coming months,” Knot said. The institution headed by Christine Lagarde expects to return to the 2% price stability target in the last quarter of 2025.
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