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Central bank governor says more needs to be done to tackle inflation

Klaas Nott speaks to the media. Photo Sem van der Wal ANP

The Dutch economy and the Dutch financial sector are currently in good shape, but more needs to be done to combat inflation, central bank governor Klaas Knot said in a presentation of the DNB’s annual report on Thursday. Stated.

The economy is set to grow 4.5% in 2022, the labor market is tighter than ever, and the solvency of banks, insurers and pension funds remains at stable and resilient levels, says Knot. .

But we are not satisfied with the current high level of inflation.” “The pandemic and war have pushed up energy and food prices on the one hand, and a booming economy fueled by government supportive policies on the other has pushed up inflation.”

As a result, Dutch inflation last year was 11.6%. “And when you’re struggling to buy groceries, it doesn’t really matter how optimistic the macroeconomic outlook is. Times are tough for many,” Knott said. .

The European Central Bank said it “still has a lot of work to do” to bring inflation back to its 2% target. And he reiterated an earlier call for the Dutch government’s help to target only those most in need.

Knott also highlighted three specific uncertainties facing the Dutch economy: rising interest rates, the war in Ukraine and debates between the government and corporations.

As interest rates rise, financial institutions will need to recalibrate to a world of positive rates and “get out of a situation where money was free for a long time,” he said.

The issues facing SVB in the US and Credit Suisse in Switzerland “are a reminder that poor risk management can get financial institutions into trouble and undermine confidence in the financial sector,” it said. he said.

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Challenges facing the Dutch economy

“The financial sector must also remain resilient with adequate financial buffers,” the central bank governor said. “The fact that a sector can absorb shocks now is no guarantee for the future. The past few weeks have been a reminder that implementing buffer requirements is beneficial for both large and small banks.

https://www.dutchnews.nl/news/2023/03/more-needs-to-be-done-to-tackle-inflation-says-central-bank-chief/ Central bank governor says more needs to be done to tackle inflation

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