AMSTERDAM, Oct 10 (Reuters) – European Central Financial institution (ECB) governing council member Klaas Knot stated on Monday that markets appear to be underestimating the danger that inflation will likely be larger than fashions are predicting.
Knot stated there’s a vital probability inflation in 2024 will likely be larger than the two.3% the ECB has guided for, however that markets didn’t appear to have priced on this danger but.
“The ECB has repeatedly stated dangers for the inflation outlook are tilted to the upside,” Knot instructed reporters. “However I don’t understand how a lot consideration is given to that warning.”
Knot stated authorities assist for households to assist with rising vitality costs can gasoline inflation within the years to come back.
“If assist similar to given in Germany and the Netherlands turns into the usual, inflation and rates of interest will rise additional,” the president of the Dutch central financial institution stated.
Germany was criticized final week by different EU international locations for saying a package deal of round 200 billion euros ($194 billion) to defend customers from rising vitality prices in 2023 and 2024.
A Dutch plan to spend round 23 billion euros on an vitality worth cap subsequent yr quantities to roughly the identical per capita.
Knot stated it was clear the ECB would announce a major charge hike once more at its assembly on the finish of the month.
“All current knowledge make it clear that this isn’t the time for us to decelerate. However it’s too early say how huge that step must be.”
($1 = 1.0305 euros)
Reporting by Bart Meijer; Enhancing by Mark Heinrich and Alexander Smith
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