ECB’s Kazāks: Hope to Return to Price Stability Target ‘Quite Soon’

30 August 2024

By David Barwick and Isabel Teles – TALLINN (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks on Friday said that he hoped to see euro area inflation of 2% restored soon, but warned that structural changes were needed to ensure badly needed economic growth.

During a panel discussion at Eesti Pank, Kazāks, who heads Latvijas Banka, said, ‘Monetary policy has, I think, done a very good job in terms of ensuring that we're back, and I hope we will get to the target quite soon as well. But overall, this very heated episode of extremely high inflation is behind us.’

This meant that the euro area was ‘back to more normal levels of inflation that provide more stability and provide basis for growth’, he said. Still, activity in the region remained ‘very weak'.

‘One quarter is better, the other one is weaker and all these kind of things’, he elaborated. ‘So there is no strong recovery and of course to a large extent this is a structural story and there's no way around it.’

‘Even if monetary policy will maintain inflation at 2%, if there is no improvement in the structural economy, then growth will not be there’, he continued. ‘And if there is no growth, of course at one point political economy is at risk of becoming even more populist. So it's not a stable equilibrium. We need more growth. Europe is in bad need of stronger growth.’