ECB’s Kazāks: Downside Risks to Inflation “Better Known”, But Upside Risks Should Not Be Underestimated

27 November 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks said on Thursday that although downside risks to inflation are now “better known”, potential upside risks should not be overlooked.

In an interview with Reuters, Kazāks, who heads the Latvijas Banka, said that “[g]iven the data we have received up to now, I don’t think the time is ripe for discussing a rate cut.”

He emphasized that the 2026 and 2027 projections due in December would carry far more weight than the 2028 figure, which he said would have “a wide margin of error” given both its distance and the current level of uncertainty.

Kazāks said that any delay to the EU’s Emissions Trading System (ETS) 2 would “flatten” inflation, but argued that policymakers should continue to focus on core inflation, which he noted had been running “well above 2%.”

Downside risks to inflation, stemming from the ETS 2, the rerouting of Chinese goods in Europe and the appreciation of the euro, were “much better known” than upside risks like fragmentation, but these should also not be ignored, he said.

Related articles:

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• Exclusive: ECB’s Kazāks: “May Well Be the Case” That Next Rate Move Could as Easily Be a Hike as a Cut
• ECB’s Kazāks: Rate Move Needed if Inflation “Consistently and Significantly Below 2%”