ECB Official Warns of High Inflation and the Need for Further Monetary Tightening

Arabictrader.com – In a press briefing on Wednesday, Claes Nott, the European Central Bank’s policy maker and Governor of the Bank of the Netherlands, made some very dovish comments about inflation, monetary policy and their impact on financial markets.

Nott said that although financial markets in the region have not yet faced strong pressures, the extension and length of the monetary tightening cycle may eventually weigh on the market and cause obvious pressures.

Commenting on the European Central Bank’s lowering of inflation expectations in its report yesterday, the Dutch policy maker said it appeared to be very optimistic, noting that the rate of inflation, especially core inflation, would remain very high for a long period of time.

The member added that he still believes that the European Central Bank should continue to tighten its monetary policy further, explaining that this will be necessary to reduce high inflation, especially in light of the strong resistance it shows towards decline.

The Governor of the Bank of the Netherlands also stated that he is not convinced that the current levels of interest rates at the European Central Bank are sufficient tightening to influence the required degree, adding that this calls for more than raising interest rates during the upcoming meetings.

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