ECB’s Kazāks: ‘No Need to Rush’ About Policy Easing

26 June 2024

By David Barwick – HELSINKI (Econostream) – The European Central Bank should not be in any hurry about lowering interest rates, according to ECB Governing Council member and head of Latvijas Banka Mārtiņš Kazāks on Wednesday.

Speaking at the 3rd International Monetary Policy Conference of the Bank of Finland, Kazāks said, ‘We are easing. … But of course we will do it in a way that is data-dependent, we will see what happens.’

There was ‘no need to rush head over heels’, he said. The ECB should instead move ‘step by step’, recognising that it does not know exactly where the journey is going, he said.

‘Who knows where the r* is?’ he asked rhetorically. ‘It may change.’

‘So just take step by step, take a target in view and then do what is necessary’, he said, adding that ‘life is uncertain’.

A return to the effective lower bound ‘does not seem to be a baseline scenario anytime soon’, but nothing can be completely ruled out and central bankers always need to be ‘ready to do our job’, he said.

‘The fragmentation of the markets is still there and very often across national borders’, he said.

The current price stability target of the ECB with its symmetry around 2% should be maintained, he said.