- ECB should continue half-point rate hikes, says Klaas Knot
- Pace set at 50 basis points for multiple meetings, tightening to continue till summer
- Risks to inflation outlook to become balanced in H1, time for nuanced policy response.
According to Governing Council member Klaas Knot of the European Central Bank (ECB), the bank should continue with half-point interest rate increases at the next two meetings, and that the time to slow the pace of hikes is still far away.
Knot stated that the bank made a step down in December from 75 to 50 basis points, and that this will be the pace for a multiple number of meetings. He said, So that means at least the two in February and March.
I do think that we will continue to be in tightening mode until the summer. Knot believes that at some point in the first half, risks to the inflation outlook will become more balanced, and that would be the moment for the ECB to become more nuanced in its policy response.
He added, "That would also be a time in which we could make a further step down from 50 to 25 basis points, but we are still far away from that. I want to re-emphasize that this is not in sight for the upcoming meetings."