By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks said on Friday that the ECB would avoid rushing into policy decisions and would instead assess possible monetary policy changes in upcoming meetings, beginning in April.

In an interview with Latvian broadcaster TV3, Kazāks, who heads Latvijas Banka, said the ECB currently knew only that the conflict in the Middle East would push inflation higher “by some percentage points a year” while also weakening growth.

How strongly higher energy prices feed through to the economy and inflation would determine the ECB’s response, he said.

Still, he noted that “for the time being, we are not rushing; we will monitor developments carefully, and at the next meetings – with the next one already in April – we will assess what needs to be done on the monetary policy side.”

Kazāks said a recession scenario could not be ruled out if the war were to drag on, though the hit to energy prices and production capacity would need to be much greater than what had been seen so far.

He added that financial markets were already pricing in rate increases this year and that Euribor had moved higher. The ECB, he said, would watch how the conflict and its economic effects evolve before deciding on its course of action.

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