ECB’s Kazāks: Data-Dependence Crucial After June Rate Cu

29 May 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – The European Central Bank must stay data-dependent and should not switch to autopilot after its first rate cut in June, ECB Governing Council member Mārtiņš Kazāks said Wednesday.

Kazāks, who heads the Bank of Latvia, said at a virtual closed-door event for private bankers that ‘data-dependence [is] still key’, according to his presentation.

"As recession risks fade, barring a major surprise, the ‘insurance’ rate hike of September 2023 may now be reversed", he said.

Despite the significant progress, declaring a victory on inflation would be premature, he said, as the ‘last mile may still be rather bumpy’.

According to Kazāks, the euro area economy was getting better, but structural weaknesses could complicate recovery and economic growth.

‘Weak productivity growth is a challenge for monetary policy’, he said, with ‘slower wage growth’ needed to keep unit labour costs and inflation in check.