ECB’s Knot: Services Inflation Main Concern Right Now

12 October 2023

By Isabel Teles – MARRAKECH, Morocco (Econostream) – European Central Bank Governing Council member Klaas Knot on Thursday said that domestic factors such as services inflation were now more concerning than external factors.

Speaking at a panel during the 2023 annual meeting of the Institute of International Finance, Knot, who heads De Nederlandsche Bank, ‘The factors behind inflation have moved a little bit from these external factors to domestic factors’, in which context ‘the main domestic concern right now is services prices inflation.’

The transmission of ECB interest rate hikes was probably not yet completed, he said.

Monetary policy was going ‘on a road to good places’, he said. ‘In the sense that policymakers and banks now have the incredible prospect of the return of inflation to target, let’s say, in the next year or two.’

Services inflation would moderate, he said, ‘but of course, the development of wages will be quite instrumental. … That we will have to monitor.’