ECB’s Knot: Interest Rates Can Only Be Cut When Wages in Line With Lower Inflation

28 January 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Klaas Knot on Sunday said that the key development necessary for an interest rate cut was slower wage growth. 

In an interview with Dutch television interview programme Buitenhof, Knot, who heads De Nederlandsche Bank, said, ‘We now have a credible prospect that inflation will return to 2% in 2025. The only piece that's missing is the conviction that wage growth will adapt to that lower inflation.’

Once that conviction was confirmed, the ECB ‘will be able to lower interest rates a bit’, he said.