ECB Policymaker Warns Against Persistent Low Interest Rates

ECB governing council member and the head of the Dutch central Bank, Klaas Knot, has spoken out against low interest rates in a recent interview. Klaas made these comments in an interview with Dutch newspaper De Volkskrant, stating that keeping interest rates low in the long term could prove to be counterproductive.

Knot expresses concerns about how ultra-loose monetary policies with low interest rates could prolong for another five years, and this persistence could drive consumers towards increasing their savings instead of driving consumption, causing weakness in inflation rates. Knot comments, “From a macro-economic perspective that would be undesirable”.

This is not the first time Knot has criticized the ECB for maintaining low interest rates – when the bank lowered rates earlier this year, he termed the move as disproportionate. Knot has also urged the ECB to explore ways to set more flexible targets for inflation while reviewing its monetary policy under the leadership of Christine Lagarde.