European Central Bank member says market is mispricing rate hikes, expects more to come

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European Central Bank member says it will not stop at one single 50 basis point hike, 'that's for sure'

"It will not stop after a single 50 basis point hike, that's for sure," Klaas Knot, who serves as the governor of the Dutch central bank, said regarding the ECB's upcoming moves.raised rates four times throughout 2022, bringing its deposit rate to 2%. The central bank in December said it would be increasing rates further in 2023 to address sky-high inflation.

December inflation came in at 9.2% in the euro zone, according to preliminary numbers. This was the second consecutive monthly drop in price rises across the euro zone. However, Knot doesn't think all of the recent data is "encouraging." "We have seen one more inflation reading where there were no signs of abating of [the] underlying inflationary pressures. So we have to do what we'll have to do, and core inflation has not yet turned the corner in the euro area and that means the market developments I have seen in, let's say, last two weeks or so are not entirely welcomed from my perspective. I don't think they are compatible actually with a timely return of inflation toward 2%," Knot said.

 

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