Klaas Knot says ECB should keep a hawkish tilt as he vies to succeed Lagarde

Knot's read on inflation and policy

Klaas Knot sees the inflation fight stretching on. "Unfortunately, core inflation, so second-round effect via services and goods in the consumption basket, will probably also pick up, and is going to be a problem then also for the ECB," he said, adding, "We will continue to see small shocks that will lift inflation, which the ECB then will have to counter with a somewhat hawkish monetary policy posture."

Asked why he wants the top job, Knot said in The Hague that his crisis experience matters. He does not like crises, he noted, but sees them as openings to act. "Things become fluid," he said. "Analytically these are the times where you really do some innovative thinking, where you can really push the envelope much further."

The race to replace Lagarde

Lagarde announced last week she will leave the ECB presidency in early February, well before her mandate expires. On Wednesday, the Netherlands confirmed it will put forward Knot, who led the Dutch central bank until last year. He is considered one of the frontrunners and will compete with Spain's Pablo Hernandez de Cos.

Euro-zone governments have until Friday to submit nominees. Finance ministers plan to review the slate on Nov. 9, though no decision is expected at that meeting, Dutch Finance Minister Eelco Heinen told parliament in a letter.

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Why it matters for your portfolio

Price pressures have not gone quietly. Euro-area inflation reached 4% in October, a three-year high, and the ECB has already lifted rates twice. Markets generally foresee another hike in December, which lines up with Knot's message that policymakers may need to lean hawkish to offset new inflation bumps.

A tighter-for-longer path would keep borrowing costs elevated, a headwind for rate-sensitive corners of the market and a support for yields. Watch the nomination timeline and December meeting expectations together, since leadership signals often shape rate path narratives.

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