ECB’s Kazāks: We Remain Determined to Reach Our Price Stability Target

8 November 2023

By David Barwick – RIGA (Econostream) – The European Central Bank Governing Council member Mārtiņš Kazāks on Wednesday vowed that the euro area’s monetary policymakers would restore price stability.

In a speech to open the annual conference of Latvijas Banka, which he heads, Kazāks reminded of the ECB’s price stability target. ‘We are committed to our target of 2% and we shall deliver it’, he said. ‘Our current outlook forecasts that we will achieve it in the second half of 2025.’

‘We are very clear on our target and of course we are determined and we shall reach it’, he added.

Monetary policy had little influence on aggregate supply, whilst fiscal and structural policies were not primarily concerned with stable prices, he said.

Nonetheless, if the latter two policy areas were inconsistent with the former, then restoring price stability would become less straightforward, he cautioned.

Setting the stage for economic growth in Europe in general required taking into account ‘a fundamental decarbonization of our economic system during the next generation’, he urged. On the contrary, he noted, ‘we are still subsidizing fossil fuels while renewable energy projects are facing bureaucratic hurdles.’

Although some members of society would inevitably lose economic ground as a consequence of the transition, it was better to concede the lack of sufficient resources to mitigate the impact universally, he said. In any case, he observed, making the adjustment too painless would weaken the motivation to implement it.

At the same time, the context of any revival of European economic growth would include a ‘more adverse’ global setting, in which violence in particular was becoming a more defining feature, he said.

In this respect, Kazāks noted that Ukraine was still mired in a major war against Russian aggression.

‘This is a key reason, one of the major reasons, why we urgently need to revive economic growth’, he reasoned. ‘A stronger economy makes for a more resilient society. The adverse environment is here to stay, unfortunately, and we will need to continue supporting Ukraine as well as keep investing in our own defence.’