ECB interest rates should reach “broadly” neutral territory following December’s Governing Council meeting Dutch central bank governor Klaas Knot said in a speech Friday, with the pace of hikes increasingly likely to slow thereafter as other tools such as QT kick in.

“As the stance of monetary policy tightens further, it will become more likely that the pace of increases will slow,” Knot said.

“This also reflects the switch to more varied tactics, with more instruments coming into play. The level to which the policy rate will be increased also depends on the calibration of these instruments, such as the roll-off of our bond holdings. It would not be consistent to keep a large balance sheet to compress the term premium, while at the same time tightening policy rates above neutral," Knot said

Knot called for an “early but partial stop to reinvestments, to test the waters before calibrating the ultimate pace of the roll-off," saying QT should also be predictable, "like watching paint dry".