Low interest hurts, but Knot is also concerned about when he rises again – Financieele Dagblad

It is the ultimate monetary paradox. The European Central Bank (ECB) pulls out all the stops to boost the economy and inflation. If successful, the going rate – which is already a time of historically low levels – up again. And there is the president of the Dutch Central Bank (DNB), Klaas Knot, which also determines the policy of the ECB, is very concerned about.

Home buyers can now take advantage of low interest rates, which makes the loan cheaper. “But people have to wonder if they can still pay the mortgage if interest rates in the future, let’s say twice as high state” Knot warned Wednesday during a hearing in Parliament on the ECB’s policy. If not, they can no longer bear the burden and that can result in foreclosure. A new housing crisis than in wait.

But investors can get to choose if the interest rate goes up again. The European Central Bank buys each month for € 80 billion of mainly government bonds. As a result, the interest rate printed on the loans and the search for yield who also will result in the rates of other categories down.

Klaas Knot (Photo: HH)

Dichotomy

That is precisely what the ECB aims, but this is according Knot ‘is a dichotomy between valuation by the financial markets and development occur in the real economy. And then is according to the economist, the risk of misallocation of capital in wait.

“Prices on the financial markets, the indicators for financial transactions, “he explained to the MPs present out. “But the signs are gone. And thus, the goats can not be distinguished from the sheep. “

Thus investors can now take decisions on a rise interest bad can unpack. And that can according Knot in the future lead to “lower levels of prosperity.”

-0.1%

for now, of rising interest rates and no inflation is -0.1%, not even near the the ECB required under but close to 2%. “This unprecedented easy monetary policy is really a time ensure inflation ‘Knot sure. When asked when he quoted one of his predecessors: “You know neither the day nor hour when it comes to inflation.

Up then the unprecedented low interest rate also causes some problems. Savers are affected and pension funds are heavy. Low interest rates ensures that they need more capital to meet their future obligations,

pitch black future ‘

You could hear a pin drop when Gerard pension federation Belts stated that “we will have a jet-black future ‘ if the interest rate for five years remains low. ‘Pensions must be reduced and premiums must be increased.

The impact of the ECB’s policy for pension savers and clear . But that does not pour out the effectiveness of the measures on the eurozone policymakers in Frankfurt. “It is not to prove that the policy is effective and it is not to prove that the policy is not effective,” sounded almost philosophical analysis of the central bank president, who has never made a secret of his against the large-scale buy-back program is

Salmon

For Gerrit Zalm, who was invited as chairman of ABN Amro to give his opinion on the policy, it all did not have to. “The ECB has itself led to believe that there is price stability as inflation below but close to 2% ‘, says former finance minister. “Now the core inflation for a while around 1%, and for me that would be no reason to intervene. At current inflation really act no disasters. The ECB has to sit for a while on the hands.