ECB’s Knot says several 50 bps rate hikes possible if inflation worsens

ECB board member Klaas Knot seems at a Dutch parliamentary listening to in The Hague, Netherlands September 23, 2019 REUTERS/Eva Plevier

BRUSSELS, June 17 (Reuters) – European Central Financial institution policymaker Klaas Knot instructed Dutch radio broadcaster BNR on Friday the ECB might have to make a number of 50 foundation level fee hikes if inflation continues to rise and that he anticipated about 200 foundation factors of hikes.

Referring to core inflation, he stated: “If it continues to rise then we are going to proceed to accentuate, and there shall be a number of rate of interest hikes of fifty foundation factors.”

Knot indicated he thinks 200 foundation factors of hikes are wanted over the subsequent a number of months.

“Then we’ll must look whether or not that is sufficient to deliver inflation again to 2 p.c within the center to long run,” he instructed BNR.

“If it isn’t sufficient then the rate of interest should go up additional. I am unable to connect a share to that, not possible. It can take some time to get the primary two share factors … I do not count on we’ll be there earlier than the start of 2023.”

Involved by surging inflation, the ECB final week stated that it could elevate its key rates of interest in July by 25 foundation factors and once more in September, when a much bigger enhance shall be obligatory if the outlook has not improved. learn extra

Knot had instructed French newspaper Le Monde on Tuesday the ECB’s choices for a September rate of interest hike weren’t restricted to 50 foundation factors. learn extra

The Dutch central financial institution chief’s newest feedback bolster his hawkish stance on what he known as “scandalously excessive inflation” within the interview aired on Friday.

Figures on Friday confirmed that euro zone inflation rose to a document excessive 8.1% final month, greater than 4 occasions the ECB’s goal. learn extra

The ECB has stated it goals to lift charges in the direction of the impartial stage, the place it’s neither stimulating nor slowing financial development. The impartial fee is unobservable however most policymakers put it someplace between 1% and a pair of%.

Reporting by Marine Strauss, Toby Sterling and Balazs Koranyi @StraussMarine
Enhancing by Mark Potter and Catherine Evans

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