ECB’s Knot: ‘No Longer Necessary’ to Restrict Economic Growth When At 2% Inflation

2 February 2025

ECB’s Knot: ‘No Longer Necessary’ to Restrict Economic Growth When At 2% Inflation
Klaas Knot, governor of de Nederlandsche Bank, at the ECB’s Governing Council meeting in Ljubljana on October 17, 2024. Photo by Adrian Petty/ECB.

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Klaas Knot said on Sunday that the ECB wouldn’t need to be restrictive once inflation reached its 2% target.

In an interview with Dutch TV NPO1, Knot, who heads De Nederlandsche Bank, said that the ECB’s stance was still having a negative impact on the economy, ‘[b]ut when we are back at 2% inflation, that is no longer necessary, so gradually we are taking our foot off the brake and trying to aim for the moment when we have recovered 2%.’

Knot said he expected US tariffs to generate higher inflation and interest rates in the US that would probably weaken the euro further.

‘We’re already seeing that reflected in long-term interest rates’, he said. ‘Some of that will spill over into Europe.’

All sides of a trade war lose, according to Knot, and he expected the affected countries to retaliate, despite the best option being doing nothing.

‘Europe will not want to be pushed around. We are also a powerful trade bloc with 400 million consumers’, he indicated.

 

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