ECB Governing Council member Klaas Knot said today that “there is still room to cut rates… But of course that would have to be seen in conjunction with our overall monetary stance which is determined by a multiplicity of tools.”
He was “cautiously optimistic” about recovery in 2021. But relatively lower production in the Eurozone would limit inflation. “It has to be seen how that will play out, before we can start talking about normalizing interest rates.”
Knot added that ECB would monitor the strength of Euro closely. “If it were to become too dominant, in terms of threatening to derail our inflation objective, then of course we would have the tools available to counter that.”
