Interest Rates

ECB’s Klaas Knot warns markets could be underplaying chance of further rate hikes

The ECB deposit rate is now at 3.75 per cent — on the verge of climbing to a record high.

Klaas Knot, president of De Nederlandsche Bank NV, said markets were struggling at present. Picture: Alex Kraus/Bloomberg

Investors largely betting against a European Central Bank interest-rate increase next week are “maybe” underestimating the likelihood of it happening, according to ECB governing council member Klaas Knot.

While a slowdown in the euro zone’s 20-nation economy is sure to damp demand, updated inflation projections won’t differ much from the last round in June, the Dutch central bank chief said.

Whether such an outlook, which only just envisages price gains returning to target over the ...