ECB’s Kazāks: ECB Calm, but Not Complacent on Inflation

14 January 2026

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks on Wednesday said the ECB has fulfilled its mandate and could be more confident, but stressed that policymakers are not complacent about inflation.

Speaking to Bloomberg TV, Kazāks, who heads Latvijas Banka, said, “I think currently we are still in a good place, and that is a result of the decisions that the Governing Council took in the past few years.”

“We’ve been delivering on the mandate, and that allows us now to be … much more … kind of calm, but it by no means means that we are relaxed,” he said.

Uncertainty remained high, as did the risk of various shocks, he said, and this justified adhering to the ECB’s meeting-by-meeting, data-driven approach to policymaking.

Risks were two-sided and in that sense the situation was “relatively balanced,” he said. Upside risks included higher government spending in Germany and geopolitics, while among downside risks he pointed to elevated equity valuations—especially among AI-related firms—and the possibility that cheaper Chinese goods could be redirected toward Europe.

Turning to recent pressure on Federal Reserve Chair Jerome Powell, Kazāks said that “of course this is a worry.”

The impact of the pressure could include a “stronger inflationary bias,” he said, leading to the risk “that inflationary expectations start to de-anchor, and that means that inflation’s likely to be higher.”

For central banks, this would mean “that the next time, the screws might need to be tightened somewhat more to buy back the credibility,” he said.

Central banks had managed to restore price stability in recent years at “historically low sacrifice ratios” featuring low unemployment and only moderate policy tightening, thanks in large part to their credibility, he said.

“All these things are challenged now, and I would not worry about Europe at the time being,” he said. “But of course, the Fed is very important internationally, and that is by no means good news.”

An “independent and of course accountable central bank is the core of good monetary policy,” he said. “If the central bank independence suffers, then the central bank policy might not be that good, and also, the ability to learn from the mistakes would be undermined.”