ECB’s Knot: Starting point in the discussion is that rise in rates reflects better growth, inflation prospects

European Central Bank (ECB) Governing Council member and Dutch central bank Governor Klaas Knot said Thursday, the starting point in the central bank discussion is that rise in rates reflects better growth and inflation prospects.

Key quotes

“Can be optimistic about the economy in 2H 2021.”

“Market is pricing in cautious optimism on the outlook.”

“Banks probably have enough buffers to handle rising NPLs.”

Market reaction

EUR/USD ignores the upbeat remarks from the ECB policymakers, as it remains pressured near daily lows of 1.2037, down 0.20% on the day.

The greenback remains firmer on the session despite the retreat in the Treasury yields, as markets remain unnerved ahead of the Fed Chair Jerome Powell’s critical speech.