Paris: European Central Bank Governing Council member Klaas Knot would favor an interest-rate hike of 50 or 75 basis points in December, though he highlighted that a decision has yet to be made.
A third three-quarter point increase “would be possible, but its too early to say,” Knot said in an interview on the Buitenhof TV show on Sunday. “We still have six more weeks to go and there are still a lot of economic numbers coming out.”
The Dutch central banker, who is among the region’s more hawkish officials, said the ECB is still in the phase of bringing borrowing costs back to neutral - a level at which they neither stimulate nor constrict the economy.
“For that we indeed also need the December meeting,” he said. “We will take another substantial interest rate step.”
The ECB last week doubled its key interest rate to 1.5 per cent - the highest level in more than a decade. But with Europe at risk of a recession, officials dropped an earlier reference to rate increases continuing for “several meetings,” saying simply they expect borrowing costs to be raised “further.”
“I think the recession is becoming more and more likely,” Knot said. “I must say that in the Dutch case, we have to ask how bad is it really.”
Inflation data on Friday revealed new records for Germany, France and Italy, and figures due on Monday are predicted to show an all-time high of 10.3 per cent for the entire euro zone. The Netherlands’ own reading - also scheduled for tomorrow - is expected to stay close to last month’s 17 per cent.
