ECB's Knot: options for September are not limited to 50 basis points

ECB board member Knot appears at a Dutch parliamentary hearing in The Hague
European Central Bank (ECB) board member Klaas Knot appears at a Dutch parliamentary hearing in The Hague, Netherlands September 23, 2019 REUTERS/Eva Plevier
  • Knot to Le Monde: Sept options not limited to 50 basis points
  • Knot: real probability rates could go up in October, December

PARIS, June 14 (Reuters) - European Central Bank policymaker Klaas Knot told French newspaper Le Monde in an interview published on Tuesday that the ECB's options for a September interest rate hike were not limited to 50 basis points.

"If conditions stay the same as they are today, we should increase the rate by more than 0.25 percentage points. The following level is to go up again by 0.50 points, but our options are not necessarily limited to that," said Knot, who is also head of the Dutch central bank.

Knot added that interest rates were likely to rise again in October and December.

"Everything will depend on the data and the economic situation, but there is a real probability that rates will continue to increase in October and December," he told Le Monde.

The ECB said last week it would end quantitative easing on July 1 then raise interest rates by 25 basis points on July 21. It will hike again on Sept. 8 and go for a bigger move, unless the inflation outlook improves in the meantime. read more

Deutsche Bank has said it now expects the ECB to deliver two hefty, 50-basis-point rate hikes this year. read more

Knot also reaffirmed that the ECB was "very worried" about inflation and that 75% of prices that it was monitoring were rising by more than 2%.

Germany's consumer prices, harmonised to compare with those of other European countries, were 8.7% higher in May than a year earlier.

The rapid rise in inflation was driven initially by energy and food prices as economies emerged from COVID-19 lockdowns, but Russia's invasion of Ukraine has accelerated those trends and even underlying inflation is now twice the ECB's target.

Reporting by Sudip Kar-Gupta; Editing by Catherine Evans and Bradley Perrett

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