FRANKFURT (MNI) – European Central Bank Governing Council member
Klaas Knot told Germany’s weekly Welt Am Sonntag that upward pressures
on prices in the region are “only temporary” and are unlikely to force a
revision to inflation forecasts through 2014.

Knot, who heads the Dutch central bank, also harshly criticized his
fellow Governing Council member and Bundesbank President Jens Weidmann
for his public opposition to ECB policies.

While noting recent headwinds from commodities prices and tax
increases, Knot said that these developments are “only temporary.”

“We expect that inflation to drop back below the two percent mark
in the foreseeable future and I am confident that we will not have to
adjust our forecast to the next year (beyond the ECB’s current forecast
period),” Know said.

The latest ECB staff forecast released in September showed a
significant upward revision for 2013 inflation. The staff now project
harmonized consumer prices for next year in a 1.3% to 2.5% range,
putting the midpoint at 1.9%, up from 1.6% in June.

Knot vehemently rejected the notion of any upward adjustments to
the ECB’s price stability target of close to 2% and noted that should
the central bank not be able to meet its target, it should instead
“consider how to differently formulate certain forecasts.”

The Dutch central banker reiterated that the ECB would only
actively use its new bond buying program, OMT, should strict conditions
be met. “We are ready to temporarily play the fire brigade, but only if
we are convinced that the new house will be build more solidly. ”

Prompted whether the ECB would not have to intervene in any event
should financial market tensions reach new heights, Knot said: “The
answer is a clear no. If a country does not stick to conditions, the ECB
will not intervene…. Our interventions can only work if governments do
the right thing.”

Knot criticized Weidmann’s public opposition to the ECB’s
non-standard measures, noting that “in the ECB there is the principle
that we speak with one voice and this voice belongs to the ECB
president.” Public unity “would be helpful for our credibility,” Knot
said. “And I regret that currently we do not manage that.”

Nevertheless, Knot said that the difference between the ECB and the
Bundesbank should not be overestimated.

–Frankfurt newsroom +49 69 72 01 42; e-mail jtreeck@mni-news.com

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