ECB Governing Council member Klaas Knot reiterated that inflation remains “largely transitory” but “upside risks to this baseline dominate”. Though “we need to prepare for upside scenarios as well,” he added.
“These transitory pressures are not necessarily short-lived,” Knot said. “In fact, we have come to realize that the inflationary pressures from these sources last longer than initially thought.”
He also said that ECB shouldn’t tie itself up, as “we cannot make long-lasting unconditional commitments that might end up being incompatible with how the inflation outlook develops”. But still, conditions for a rate hike are “very unlikely” to be met next year.
