In a panel discussion today, ECB Governing Council member Klaas Knot emphasized the need for a more restrictive fiscal policy to support the central bank’s efforts in curbing inflation.
Knot stated that the ECB has “assumed most of the burden of bringing inflation down,” but he added, “A more restrictive fiscal policy would have been desirable.”
He also highlighted the impact of interest-rate hikes on debt-servicing costs, suggesting that these should be offset by higher primary fiscal balances.
Knot pointed out that increased spending by the European Union should be balanced by reduced fiscal space at the national level, noting, “After all, the national and European taxpayer is ultimately one and the same person.”
