The ECB knot is “comfortable” with cuts in the next two meetings

The European Central Bank politic The United States under President Donald Trump.

The ECB is expected to continue reducing the cost of loans this year, since the economy of the euro zone remains weak and inflation just above its 2%target, and merchants even increase those expectations this week after Trump failed to announce feared trade tariffs against the block.

Knot, traditionally a supporter of a stricter policy stance, seemed to throw its weight behind the tariff cuts on January 30 and March 6 in the light of the “encouraging” economic data.

“I am quite comfortable with market expectations for the next two meetings and beyond that I find it too early to comment,” said Dutch governor in Bloomberg TV.

“The data is encouraging, confirms the broad image that we will return to the goal in the rest of the year and, hopefully, the economy will also finally recover a bit,” he added.

But he marked “risks that will be developed in more medium and long term”, including “the many channels through which their policy (Trump's trade) could affect the global economy and the perspective of global inflation.”

The monetary markets have an almost complete price in four ECB cuts this year, leaving the rate that the Central Bank pays in the deposits of the euro zone in 2%.

This is close to the lower end of a range that ECB economists consider neutral, which is not stimulating or restricting the economy.

While some of his colleagues have raised the possibility of going below that level, Knot remained convinced.

“If the recovery continues, if we approach the target in the middle of the year, then I am not convinced that we need to enter stimulating mode,” he said. “On the other hand, there is a range for neutral … that gives us some margin.