The ECB member says the market is mispricing a rate hike, and expects more to come

Claes Nott, head of De Nederlandsche Bank, spoke to CNBC in Davos.

bloomberg | bloomberg | Getty Images

Davos, Switzerland — The European Central Bank will not stop with a single 50 basis point hike at its next rate-setting meetings, a CNBC board member said Thursday.

“It’s not going to stop after a single 50 basis point increase, that’s for sure,” Klas Nott, who serves as governor of the Dutch central bank, said regarding the ECB’s next moves.

the European Central Bank It raised interest rates four times throughout 2022, bringing the deposit rate to 2%. The central bank said in December that it would raise interest rates further in 2023 to tackle very high inflation.

Recent data showed a slowdown in headline inflation, even if it remained well above the ECB’s 2% target.

The inflation rate in December was 9.2 percent in the eurozone, according to preliminary figures. This was the second consecutive monthly decline in price increases across the Eurozone. However, Knot doesn’t think all of the recent data is “encouraging.”

“What we’ve seen so far is very discouraging data from our end,” he said at the World Economic Forum in Davos.

“We saw another reading of inflation where there were no signs of abating [the] Latent inflationary pressures. So we have to do what we have to do, core inflation has yet to turn a corner in the Eurozone and that means that the market developments that you’ve seen in the last couple of weeks or so are totally unwelcome in my view. I don’t think it’s actually compatible with a timely return of inflation towards 2%.”

See also  Flights canceled, Boston delays continue after disappointing weekend of air travel

Market players expect the European Central Bank to raise interest rates at its next meeting in February. The broader question is whether the central bank becomes too aggressive as it tightens its policy and constrains economic growth. However, Know made it clear that there will be at least two more price hikes.

“Most of the ground that we have to cover, we will cover at a steady pace of multiple elevations of 50 basis points,” he said.

“Where the pace of those kind of 50 basis point hikes will end up, I can’t say in advance, but it’s very clear our president has used combination in her wording, I’m using combination here. So it’s not going to stop after one 50 basis point hike, that’s something Certain “.

Leave a Reply

Your email address will not be published. Required fields are marked *