Markets Overly Optimistic About Early Interest Rate Cuts, Says ECB Official

European Central Bank governing council member Klaas Knot said markets are "getting ahead of themselves" with expectations for interest rate cuts starting as soon as spring 2024. Speaking at the Davos World Economic Forum in Switzerland, Knot expressed optimism for reducing inflation to 2% by 2025 but added that achieving this goal requires several factors to fall into place and warned against potentially self-defeating policies. Knot agreed no further hikes are needed, but upside inflation risks could prolong how long rates stay higher before the first cut.