ECB’s Knot: ‘Still Some Uncertainty About the Persistence of Inflation’

26 April 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Klaas Knot on Friday said that market surprises were not ruled out and that there was still scepticism about de disinflationary process.

Speaking at the CFA Institute Systemic Risk Council, Knot, who heads De Nederlandsche Bank, said, according to a text provided, ‘While inflation has somewhat eased, there is still some uncertainty about the persistence of inflation.’

Even with investors pricing a soft landing, it was necessary to remain cautious, he said. ‘Delays in disinflation or negative surprises in the future path of monetary policy may cause sudden repricing.’

Geopolitical risks were a source of uncertainty, and it was necessary to understand that there could be surprises, he said.

‘Market shocks could propagate’, he said. ‘Volatility in the markets could trigger vulnerabilities in some non-bank investors that are highly leveraged and face liquidity mismatches.'