VIENNA, Sept 14 The European Central Bank needs
to exercise greater flexibility in interpreting its inflation
mandate as the shock it is trying to overcome is bigger than any
other in the previous 80 years, Governing Council member Klaas
Knot said on Wednesday.
Knot added that a key challenge for the ECB is the
disconnect between its communication and market expectations, a
potential danger if the bank becomes a captive of market
"There is a pretty clear case to be made that the medium
term should be interpreted flexibly," said Knot, who is also the
Dutch central bank chief.
"You see a lot of speculation about what's next. I think
it's very dangerous for a central bank to become too much
captive of financial market expectations," he told a conference
(Reporting by Francesco Canepa; Writing by Balazs Koranyi
Editing by Jeremy Gaunt)