While the European Central Bank has already raised interest rates by several percentage points in recent months, new hikes are on the way. This was stated yesterday by Klaas Knot, member of the Executive Committee of the ECB and president of De Nederlandsche Bank, in an interview with the Financial Times. Carsten Brzeski, chief economist at ING Germany, counts at least 100 basis points.
‘We now have a two percent deposit rate. And if Knot really wants to actively slow down the economy, that means at least another 100 basis points more for me. Maybe 150.’
This would mean that interest rates will rise another 1.5%, as an inflation inhibitor. According to Brzeski, this could happen in the first half of 2023.
Wait and see
Knot’s claims are not isolated. ECB chief Lagarde has spoken out before, and Knot himself has often said that the previous hikes weren’t the last. The ECB clearly says it is not ready yet, but we still have no idea what the effect of interest rate hikes will be. For example on the real estate market», says Brzeski, who is actually in favor of a suitable time stamp. “Waiting to see what the effect of the policy of recent months will be is not a bad idea.”
There is a danger that the ECB will make the same mistake it has been making for ten years, says Brzeski. “Always continuing with an expansionary monetary policy without looking at the effect of the policy and without wanting to bring down inflation at all costs”.
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.
