In an interview with MNI Market News, European Central Bank (ECB) policymaker Klaas Knot said that the headline inflation appears to have peaked, as reported by Reuters. Knot, however, added that keeping current pace of hikes into May could well be needed if underlying inflation does not materially abate.

Additional takeaways

"Sharp decrease in energy prices could bring down headline inflation faster than projected by the ECB."

"Slowdown in growth seems even more shallow, short-lived than expected."

"Increased activity may improve workers' bargaining power, lead to more inflation down the road."

"ECB focus has shifted from energy, headline inflation to breaking underlying inflation."

"Would expect inflation in core goods to start falling first."

"Core services inflation could prove more persistent."

"It will take some time before core inflation slows down."

"Forward-looking wage indicators confirm wage growth will increase further in 2023."

"Policy rates have swiftly been brought into the neutral range."

"Once we see a clear, decisive turn in underlying inflation dynamics, I expect us to move to smaller steps."

Market reaction

These comments don't seem to be helping the Euro gather strength against its rivals. As of writing, the EUR/USD pair was posting small daily losses at 1.0716.