ECB’s Kažimír: Fiscal Policy Should Not Counterbalance Interest Rate Levels
27 January 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Peter Kažimír said on Monday that the fiscal authorities should not adopt policies inconsistent with high interest rates as this might spur inflation.
In a panel discussion at the Lamfalussy Lectures conference, Kažimír, who heads the National Bank of Slovakia, said that fiscal policy should not counterbalance interest rate levels as it ‘must avoid creating some inflationary pressures’.
The temptation of playing the ‘blame game’ between monetary and fiscal authorities was ‘pretty high’, and even more so in periods of high inflation, he said.
Kažimír stated that Europe was not a ‘true monetary union’.
‘We have a lot of gaps we have to fill’, he said. ‘There’s no political will to do it.’
Europe had to pay a high price related to the recovery from the Covid and energy crises, he said, as 80% of government measures then were not targeted, as the ECB had recommended.
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