ECB’s Knot: We will have to wind down QE as quickly as possible, doesn’t see taper ending before Q3

Dutch Central Bank head and European Central Bank Governing Council member Klaas Knot said on Friday that the ECB will have to wind down its Asset Purchase Programme (APP) as quickly as possible, reported Reuters. However, Knot said he does not see the tapering of the ECB’s QE programme ending before Q3. Rather, he continued, its more likely to end the APP at the beginning rather than end of Q3. 

Referring to Friday’s much higher than expected Eurozone HICP inflation reading, Knot said it was water under the bridge and emphasised that the ECB’s gradualism is not a mistake. We can afford to be gradual as long as inflation is see converging towards the bank’s long-term 2.0% target, he noted. Knot said that he doesn’t see a recession, but instead sees “slowflation” and said that there could be a rate hike in September, October or December. 

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