(Bloomberg) -- European Central Bank Governing Council member member Klaas Knot said an “inappropriate fiscal stance” has hampered the effectiveness of monetary policy to tackle inflation.
- “The recent energy crisis and its impact on inflation led to a monetary tightening, while fiscal policy continued to be very loose,” the Dutch central banker told a panel discussion Wednesday in Rotterdam
- Knot says the ECB assumed “most of the burden of bringing inflation down”
- “A more restrictive fiscal policy would have been desirable”
- “Interest-rate hikes put upward pressure on debt-servicing costs, which should have been compensated by higher primary fiscal balances”
- Knot says more spending by the European Union should be accompanied by less fiscal space at the national level
- “After all, the national and European taxpayer is ultimately one and the same person”
- NOTE: Lagarde Says ECB Strongly Backs Discipline on EU Fiscal Rules
©2024 Bloomberg L.P.
