ECB’s Knot: Restrictive Policies Remain Necessary

13 October 2023

By Isabel Teles – MARRAKECH, Morocco (Econostream) – European Central Bank Governing Council member Klaas Knot on Friday said that it would be necessary to maintain the current restrictive monetary policy stance to ensure monetary stability.

Speaking at a Euro50 Group roundtable on the margins of the annual meetings of the International Monetary Fund and the World Bank Group, Knot said according to a text on the website of De Nederlandsche Bank, which he heads, that ‘[t]o continue this progress, and reach our target, restrictive policies will likely remain needed for some time to come.’

‘Whether rates are sufficiently restrictive’, he said, ‘depends on how much traction our tightening has on spending. Not only now, but also in the months ahead.’

He said that there were indicators that ‘the pass-through of our tightening campaign is firmly taking hold’, but warned that it was still necessary to be cautious about inflation.

‘We have made important progress in regaining control over inflation, but we are not quite there, yet’, he said.

‘All in all, current policy is in the right place’, he said. ‘If, nevertheless, the disinflation process were to stall, central banks will stand ready to, once again, adjust their interest rates.’