This year the ECB, of which Knot sits on the board on behalf of the Netherlands, raised the official rate by 2.5 percentage points. This means that interest is now at 2%, where it was still negative at the start of the year. The central bank is therefore trying to curb high inflation.
Between now and July 2023, there will be five meetings where the central bankers of the euro countries will meet and decide whether interest rates will rise further. Knot expects interest rates to be raised by half a percentage point a few more times before peaking in the summer.
“The risk of under-doing is still the biggest risk,” Knot said. “We are only at the beginning of the second half.”
The DNB chairman admitted to the FT that the European central bank started too late to phase out its debt-purchase programmes. This is the other tool central banks have to curb inflation.
