Still this year?
ECB council member expects rate hike
2/7/2022 11:38 am
When will the interest rate hike finally come? In view of the high inflation, ECB Council member Knot expects a first increase this year. A second step could then follow in the coming year.
Dutch European Central Bank (ECB) Governing Councilor Klaas Knot believes interest rates will rise later this year given high inflation. The central bank could make an increase in the fourth quarter of this year, Knot said on Dutch television. A second interest rate hike could then take place in the spring of 2023.
Like other high-ranking central bankers, Knot pointed out differences between the euro zone and other large economic areas. The euro area is not in the same situation as the USA, where inflation is primarily due to internal reasons. In the currency area, on the other hand, most of the inflation comes from abroad, and the ECB cannot do much about it.
The head of the Dutch central bank is seen as a representative of a tight line and a critic of the very loose ECB orientation. Last week, ECB President Christine Lagarde gave the first indications of a tighter monetary policy. The background is the high inflation of 5.1 percent in the euro area recently, while the ECB is only aiming for 2 percent in the medium term.
However, Lagarde remained vague in her statements and did not go into details of a possible change of course. On the financial markets, interest rate hikes and the end of the general asset purchase program APP are considered possible for this year.