Klaas Knot, president of De Nederlandsche Bank NV, speaks during a panel session on day three of the World Economic Forum (WEF) in Davos, Switzerland. The European Central Bank is assessing how to respond to inflation running at a record high.
Hollie Adams/Bloomberg via Getty Images
Markets are “getting ahead of themselves” with rate cut expectations, the president of the Dutch central bank, Klaas Knot, told CNBC Wednesday.
“The problem for us is that in the end that might become self-defeating. We are optimistic that in the end we have a return to inflation to 2% in 2025. But a lot needs to go well for that to happen,” European Central Bank member Knot said, speaking at the World Economic Forum in Davos.
“Underlying that projection is an interest rate path, assumed interest rate path, that contains significantly less easing than is currently embedded in market pricing. So that runs the risk to become self-defeating.”
ECB officials have largely pushed back on market expectations for interest rate cuts starting as soon as the spring.
Austrian central bank head Robert Holzmann, an ECB arch-hawk, told CNBC on Monday that there were threats to the inflationary picture that could mean rates do not move lower at all this year.
This is a developing story. Please check back for updates.
