ECB Knot
ECB's Knot says:
- ECB should act in the face of high inflation
- Gradual but timely normalization is needed
- High inflation and not entirely due to supply shock
- Demand has recovered far quicker than expected
The comments are in line with his comments from last week, when he said:
- Gradualism is not a mistake
- We can afford to be gradual as long as inflation seen converging towards target
- Calls for APP program to be wound down as quickly as possible
- Does not see QE unwinding sooner than Q3; more likely early Q3 than late
- Doesn't see recession, sees 'slowflation'
- Rate hike can come in Sept, Oct or Dec
- Likelihood of second round effects is becoming larger
