ECB Governing Council member Slapenas: Energy shock unlikely to change policy for now, slight inflation overshoot can be tolerated

Golden Ten Data, March 6 – European Central Bank Governing Council member and President of the Dutch Central Bank, Klaas Knot, stated that this week’s rise in energy prices is not sufficient to alter the ECB’s current “good position” policy stance, and that the ECB can tolerate a slight overshoot of its inflation target. Knot said the ECB has learned from the inflation surge of 2021/22, but since this energy shock originates from the Iran war, its nature is different and should not be overly compared. He stated: “My view of the current situation has not changed significantly; we are still in a good position.” He added: “Everything depends on how the conflict develops.” He also suggested that even if no policy adjustment is made at the March 19 meeting, sensitivity analysis under the new forecasts or consideration of other scenarios should be discussed. Knot pointed out that the ECB can tolerate a moderate and temporary overshoot of the 2% inflation target, just as it has tolerated levels below 2% in recent months.