Lagarde stresses Klaas Knot is not the only candidate to replace her as ECB head

European Central Bank (ECB) President Lagarde believes former Dutch central bank chief Klaas Knot has the right qualities to lead Europe’s top monetary authority. However, she stressed he is not the only option.

Christine Lagarde’s comments were reported by Dutch newswire ANP ahead of the release of a podcast episode of “College Leaders in Finance,” scheduled for broadcast on Sunday. Her own non-renewable term as ECB president draws to a close in October 2027.

“I’ve known him for at least six years. He has the intellect, the stamina, and the ability to engage others,” the ECB head was quoted speaking in the podcast.

She added that the job requires balancing the voices of the Governing Council, which includes the heads of national central banks from the 20 eurozone member states.

“They’re often all prima donnas, and you have to facilitate them all,” Lagarde continued, “He has that ability. But he’s not the only one.”

Knot ended a 14-year tenure in June as president of De Nederlandsche Bank (DNB), the Dutch central bank, which he had led since 2011. He handed the reins to Olaf Sleijpen, who was appointed by the board after he was nominated by Dutch Minister of Finance Eelco Heinen.

Klaas Knot’s tenure at the DNB was long

Knot attended several interviews shortly before leaving the DNB, where he opposed proposals to reduce the appointment term for future Dutch central bank presidents from seven years to five. According to him, shorter terms would limit the ability of national leaders to build authority in international institutions.

“I became chairman of the Financial Stability Board (FSB) in December 2021,” Knot told Het Financieele Dagblad (FD). “That was ten and a half years after I took office as DNB president. With two five-year terms, I would not have reached that position.”

He argued that such international roles are imperative for the Netherlands. “Only with a strong position in international supervisory bodies can the Netherlands respond timely to developments impacting its financial system,” Knot said.

The former DNB President admitted his extended leadership meant everyone in management was appointed by him, which is a vulnerability policymakers “must be aware of.” However, Knot reiterated that during his time in office, he encouraged independent voices to speak up. 

“If you were a fly on the wall during our board meetings, you would see plenty of pushback.”

During his final months at the Dutch central bank, Knot bashed the tariff policy of US President Donald Trump. Trump’s advisers had drawn up plans for tariffs on all countries except Russia, Cuba, Belarus and North Korea.

“It has nothing to do with economic theory,” Knot told Dutch television program Nieuwsuur. “And if it were not so serious, it would be laughable. Countries are at different stages of development, and some of those require a surplus or deficit. There is nothing wrong with that in itself.”

Lagarde mulls steady approach on eurozone inflation

Lagarde’s succession remarks come just a day after the Eurozone inflation data was released. Speaking at a monetary-policy conference in Helsinki on Tuesday, she said risks to inflation in the euro area seem balanced, although policymakers should keep an eye out for new shocks.

“The risks to inflation appear quite contained in both directions. With policy rates now at 2%, we are well placed to respond if the risks to inflation shift, or if new shocks emerge that threaten our target,” she explained.

The ECB halved its deposit rate within a year to maintain economic growth, but there are hiccups that could ensue from the ongoing trade tensions with the United States. 

As reported by Cryptopolitan on Wednesday, annual inflation in the eurozone accelerated in September to reach 2.2%, the highest level since April. That compared with 2.0% in August and was broadly in line with economists’ expectations. On a month-on-month basis, consumer prices rose 0.1%, matching August’s increase.

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