ECB’s Knot: Prolonged monetary tightening might still lead to stress in financial markets

European Central Bank (ECB) policymaker, Klaas Knot, said on Wednesday, “prolonged monetary tightening might still lead to stress in financial markets.”

“Inflation expectations in markets seem optimistic,” he added.

Market reaction

EUR/USD is recovering ground, although remains stuck near the 1.0700 barrier so far this Wednesday. The pair is modestly flat on the day.