Knot signals ECB openness to new crisis tools, Rabobank notes
Klaas Knot, the Dutch candidate to succeed Christine Lagarde as ECB president, told the Financial Times the bank would act without hesitation if circumstances demanded it, Rabobank highlighted in its Global Daily.
Knot indicated that his comments were not aimed at further rate hikes tied to geopolitically driven inflation. Instead, he was referring to the opposite scenario: a future crisis of a different nature.
In that case, Knot said he would not rule out the European Central Bank (ECB) designing a new, more targeted instrument to respond. Rabobank’s Global Daily drew attention to the remarks as a signal of the kind of flexibility a Knot-led ECB might bring to the table.
Why it matters for markets: Signals about the ECB’s willingness to build new policy tools can shift expectations for how the central bank would respond to a future shock, influencing EUR/USD and the pricing of euro-area government bonds, including German Bunds and other eurozone debt.
Source: FXStreet