Markets mispricing ECB rate hikes, Knot says

FRANKFURT (Reuters) - Underlying inflation in the euro zone shows no signs of abating so the European Central Bank will continue to tighten policy at least through mid-year and markets may be mispricing future rate hikes, ECB policymaker Klaas Knot said on Thursday.

"I do think that at least until mid year, we will be in tightening mode," Knot told CNBC in an interview, adding that the ECB has been deliberately flagging multiples of 50 basis point rate hikes for the months ahead.

"The sort of market developments that I've seen over the last two weeks or so, are not entirely welcome," Knot said after investors priced out some rate hikes. "I don't think that they are compatible, actually, with a timely return of inflation towards 2%."

(Reporting by Balazs Koranyi; editing by Jason Neely)