ANP
News from the NOS•yesterday, 17:43
President Klaas Knot of De Nederlandsche Bank (DNB) is concerned about the consequences of supporting families due to high inflation. He shares the concerns of the International Monetary Fund that such measures could actually increase inflation. “I don’t want to go around the bush,” he told ANP after the IMF’s annual meeting.
Like the IMF, the head of the central bank has long pointed out that support for people struggling to make ends meet is now good. But if a package fails to meet certain conditions, it can lead to even greater inflation. In doing so, a government thwarts central banks, because they are trying to curb inflation.
According to Knot, it appeared at the IMF meeting that other countries are also facing this dilemma. “I have found that almost all countries have difficulty complying with the IMF recommendation on this. It is very clear: the support must be temporary, targeted and covered by the budget. But this is precisely what finance ministers seem to be particularly ‘targeted’. for. hard to find. “
‘Very wise’
The price cap that the Netherlands has opted for is not targeted, but applies to everyone. It is also not yet clear how the costs will be covered. “Every family benefits, including people with higher incomes who don’t really need support,” says Knot. He also doubts the cap will be a temporary measure if purchasing power remains under severe pressure next year.
According to the DNB chairman, it would be “very sensible” for the government to look at how it will finance the many billions that the temporary price cap will cost next year as soon as possible.
One option to cover the costs is to impose an additional tax on households or businesses that receive compensation but do not actually need it. Knot also tells the PA what he sees in that solution.
The government has not yet made a decision on funding. According to Minister Kaag (Finance), there is still too much uncertainty to seek coverage “in an informed and reasonable way”. According to her, the government has tried to work as specifically as possible with the support package and the support should also be temporary.
