Frankfurt (Reuters) - Klaas Knot, governor of the Dutch central bank, told the Financial Times that the ECB should take time to raise interest rates, a marked change in tone for one of the most outspoken hawks on the rate-setting council.
With the eurozone economy slowing sharply, some policymakers warned that the ECB should relax its stimulus measures and be cautious, suggesting that the ECB would almost certainly postpone the rate hike formally, still formally scheduled for the end of 2019.
In conclusion, it has sometimes been mentioned as a potential candidate to replace ECB President Mario Draghi later this year, saying there is no need to raise interest rates until there are more signs that inflation is rising slightly below the ECB target of 2%.
The Financial Times quoted Knot on Tuesday as saying: "In my opinion, we must be patient and at the exact moment when we can expect inflation to move towards the medium-term target."
"At the moment, wait-and-see attitude may be the best one."
However, he added that it was too early to say anything about the recession in the eurozone.
"The current situation may last for several quarters, but I am still positive... Later growth will return to a level slightly higher than potential, "Knot was quoted as saying.
The European Central Bank ended its $2.6 trillion bond purchase program during the crisis in December and has long guided stable interest rates.
However, the market has postponed interest rate hikes from the end of 2019 to mid-2020, as stable growth data stemmed from a sharp slowdown in economic growth, and a substantial reduction in ECB forecasts has been finalized.
Balazs Koranyi's report; edited by Alison Williams
Our criterion: Thomson Reuters Trust Principle.
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