Dutch central bank chief Klaas Knot warned against hopes for European Central Bank interest rate cuts, explaining that the possibility of holding off is still on the table. “Markets are getting ahead of themselves,” Knot commented in an interview with CNBC on Wednesday. “We are optimistic that we have a credible prospect of a return of inflation to 2% in 2025 but a lot still needs to go well for that to happen.”
Markets have bet that the ECB will slash interest rates by a combined 140 basis points in 2024; a drop from the 150 basis point prediction last week. The first interest rate cut is expected to be delivered by March or April.
Knot insisted that monetary restrictions will only be lifted gradually, with more wage data required to make an informed decision. He echoed ECB President Christine Lagarde, who told Bloomberg TV last week that the ECB would only be in a position by late spring to receive sufficient household income data to make a decision.
