Saturday, June 3, 2023

ECB’s Knot says “inflation is not dead” in Europe


© Reuters. FILE PHOTO: ECB board member Klaas Knot appears at a Dutch parliamentary hearing in The Hague, Netherlands September 23, 2019 REUTERS/Eva Plevier/

AMSTERDAM (Reuters) – Rising inflation in Europe may not be temporary, Dutch central bank president Klaas Knot said in an interview published on Sunday in NRC Handelsblad.

“Inflation is not dead,” said Knot, known as one of the more hawkish members of the European Central Bank’s governing council.

“We should not over-estimate our ability to determine what is temporary inflation and what is not,” he said.

The ECB forecasts inflation of 1.9% this year due to what it views as temporary factors amid a recovery after the coronavirus pandemic. For 2022, the bank forecasts inflation to fall back to 1.5%. Its long-term inflation target is near, but slightly below 2%.

If that is achieved in the medium term “then we’ll see whether we are able to tighten the straps (of monetary policy) as strongly as we have been able to loosen them for the past 10 years,” Knot told the paper.

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