In an interview on Dutch television overnight, ECB Governing Council member Klaas Knot emphasized that interest rates across Europe are poised for continued gradual reductions. Knot affirmed that as ECB gains confidence in achieving its 2% inflation target, “interest rates will simply keep falling.”
Looking ahead, “I would expect us to continue to gradually reduce interest rates in the coming time, also in the first half of 2025,” Knot added.
However, he cautioned against expectations of a return to the ultra-low rates seen before the pandemic. Instead, he suggested that rates are likely to settle at a “more natural level” within a range starting with a 2.
