ECB’s Kazāks: Inflation Would Reach 2% Sooner if It Is Lower Than Projected in Upcoming Months

21 October 2024

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks said on Monday that if inflation turned out to be lower than expected in the coming months, then the ECB's 2% target would be reached before the end of 2025.

In a blog post published on the website of Latvijas Banka, which he heads, Kazāks said that if inflation was lower than projected in the next months, as in September, ‘then we will probably reach the 2% inflation goal in a sustainable way sooner than at the end of next year.’

The US elections, tensions in the Middle East and the war in Ukraine were high uncertainty factors, according to Kazāks.

Undershooting inflation was a risk to take into consideration if economic activity did not recover as expected, he stated.

‘Risks to growth remain on the downside. If the recovery is delayed, this could lead to layoffs (as it becomes too expensive to keep workers), risking inflation to be driven significantly below target’, he said.

However, this was a ‘risk scenario’ and not a ‘base scenario’, and the baseline was still a soft landing in which the economy avoided a recession and unemployment did not tick up strongly, he said.