Klaus Knott, president of De Nederlandse Bank, spoke to CNBC in Davos.
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DAVOS, Switzerland — The European Central Bank won’t stop at a single 50 basis point hike at its next rate-setting meeting, a board member told CNBC on Thursday.
“It won’t stop after a 50 basis point hike, that’s for sure,” Klaus Knott, who serves as governor of the Dutch central bank, said of the ECB’s upcoming moves.
The European Central Bank It raised rates four times throughout 2022, bringing its deposit rate to 2%. In December the central bank said it would raise rates further in 2023.
The latest data shows core inflation slowing, even above the ECB’s 2% target.
December inflation stood at 9.2% in the euro zone, according to preliminary numbers. It was the second straight monthly decline in inflation across the euro zone. Knott, however, doesn’t think the latest data is all that “encouraging.”
“What we’ve seen so far is unencouraging data from our end,” he told the World Economic Forum in Davos.
“We still see no signs of an inflation slowdown [the] Core inflationary pressures. So we have to do what we have to do, and core inflation has yet to turn a corner in the euro area, which means the market developments I’ve seen in the last couple of weeks have not been entirely welcome. My point of view. “I think they’re not really compatible when inflation returns to 2% in time,” Knott said.
Market players expect the ECB to raise rates at its next meeting in February. The broader question is whether the central bank is too aggressive in its policy tightening and reining in economic growth. However, No has made it clear that there will be at least two more rate hikes.
“Most of the ground we need to cover, we will cover at a steady pace of several 50 basis point hikes,” he said.
I can’t predict where the 50 basis point rate hike will end up, but it’s clear that our president used the plural in his words, and I’m using the plural here. So it doesn’t stop after a while. A single 50 bps rise, that’s for sure.”
