ECB Knot: A further hike still a possibility, but not a certainty

ECB Governing Council member Klaas Knot made it clear that reaching 2% inflation target by the end of 2025 is non-negotiable. “I continue to think that hitting our inflation target of 2% at the end of 2025 is the bare minimum we have to deliver,” said Knot.

Knot didn’t rule out the possibility of further tightening on at September 14 meeting. “We’ve reached the finessing phase of the tightening cycle,” he noted. “Tightening—a further hike—is still a possibility, but not a certainty.”

The ECB member also underscored the importance of wage growth in achieving the central bank’s inflation target. According to him, “It’s quite crucial in the disinflation process toward 2% by the end of 2025 that wage growth decelerates visibly.”

Knot expressed concerns about current wage agreements, stating that they are “still pretty far off longer-run compatibility with a 2% inflation target plus half a percent productivity growth.”