The interest rate measures of the European Central Bank (ECB) will be lower in the next period. Klaas Knot, president of De Nederlandsche Bank (DNB), expressed this expectation during a European banking congress in Frankfurt. According to him, the ECB, of which Knot is director, is entering a new phase with a new strategy to bring down high inflation.
“I expect we will reach neutral ground at next month’s policy meeting. At that point, we are no longer stimulating economic growth, but we are not yet slowing it either. The neutral field is like halftime in a football match, when the coaches gather all their players and establish the game plan for the second half” Knot said.
Football and running
Knot also used a football field comparison regarding the unprecedented 0.75 percentage point interest rate hikes in recent months. “It was an improvised tactic to act quickly and get the policy rate to a neutral level as quickly as possible. Our tactics are likely to change to shorter passes and nimble movements, with slower speed increases.
Need to curb inflation
At the same time, Knot continues to stress that unprecedentedly high inflation must be curbed quickly. If not, he believes it will only become more expensive to lower the price level. This year, inflation in the euro countries will average 8.5%, in the Netherlands the devaluation will be 11.6%.
Earlier this week, Bloomberg news agency reported based on insiders that ECB policy makers would aim for a 0.5 percentage point rate hike next month.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
