Bank president Knot not worried about sharply higher wages 10:36 in Binnenland , Economy According to him, companies have earned enough to pay the higher wages. He is not afraid of a wage-price spiral.

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DNB president Knot
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President Knot of De Nederlandsche Bank (DNB) is not afraid that the sharp wage increases recently agreed in collective labor agreements (including health care and transport) will drive inflation further. “I said in December that wages could go up about 5 to 7 percent, I’m sticking to that,” Knot said in a conversation with the ANP news agency.

The bank president has already established that many companies make large profits and that therefore salaries can rise. Employers held back for a long time, but under pressure from strikes, including in regional transport, substantial wage increases have now been agreed. This week, wage agreements in collective labor agreements exceeded inflation for the first time in a long time, which fell back to more than 4 percent last month.

Wage-price spiral

Knot does not think it will be a problem if employers and unions conclude even more collective agreements with substantial wage increases this year. He does warn that wage agreements above 5 to 7 percent can lead to a wage-price spiral. In addition, employers pass on the higher wages in prices, which in turn leads to new wage demands.

Knot does not yet have the impression that such a scenario is imminent. In recent years, the purchasing power of workers has fallen sharply, so “a brief period in which wage increases exceed inflation can happen”.

The bank president says that the European Central Bank is working to curb inflation by raising interest rates. In the second half of this year, Knot expects “clear effects” of this, although he acknowledges that the expectation is uncertain.

He also once again appeals to the government not to drive up inflation even more with its budgetary policy. In concrete terms, in Knot’s view, this means that the cabinet should not spend too much money.

Tightened liquidity requirements

Knot was in Washington this week for the spring meeting of the International Monetary Fund (IMF). An important topic of discussion are the recent bank runs in the United States and Switzerland.

“There is a lot of attention here for the financial turbulence of the past month,” Knot told the FD. He expects that banks will have to meet stricter liquidity requirements in the future. This means that banks must have a larger financial buffer. Knot says that especially bank balances that are not covered by the deposit guarantee scheme have become more volatile in the digital world. “If a few of such customers start running, then suddenly everyone will run.”

During a bank run, customers suddenly withdraw so much money that there is a chance that a bank will collapse.

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