ECB’s Kazaks: cautious approach needed for rate cuts

The European Central Bank (ECB) should approach rate cuts cautiously to avoid a resurgence in inflation, advised Governing Council member Martins Kazaks on Wednesday.

While the recent initial cut in the deposit rate is positive news, signalling a shift from strict monetary policy, Kazaks emphasised that future cuts this year should be contingent on stable, low inflation levels.

Despite inflation falling from its peak, recent data indicate persistent price pressures, underscoring the need for careful monitoring before implementing further rate reductions. Kazaks stressed the importance of ensuring inflation trends towards the ECB’s 2 per cent target before proceeding with more cuts.

“At the moment we’re still not there, but the forecasts show that in the second half of next year we’ll be there,” he said.

Attribution: Bloomberg.