MNI BRIEF:Monpol Alone Can't Mitigate Global Tensions-ECB Knot
MNI (LONDON) - Rising geopolitical tensions cannot be mitigated by monetary policy alone, while fiscal action is constrained partly due to past pandemic support measures, Dutch National Bank Governor Klaas Knot said Thursday.
Noting that the ECB tightened policy to counter the inflationary impact of Russia's invasion of Ukraine in 2022, Knot said the current situation was more difficult.
"...monetary policy alone cannot fully mitigate the economic effects of geopolitical tensions. Fiscal policy, too, plays a key role. Ideally, fiscal measures safeguard economic activities while cushioning the blow for society’s most vulnerable. Today, however, many governments have limited fiscal space. Partly, but not entirely, due to the pandemic support measures from the past few years. And so, regaining fiscal headroom will remain a key priority in the future," Knot said this morning.