The European Central Bank has the “luxury” of not needing to rush to raise interest rates, one of its top policymakers has said ahead of a crucial monetary policy meeting next week.
Mārtiņš Kazāks, governor of the Bank of Latvia and a member of the ECB’s governing council, told the FT that while “uncertainty remains very high” because of the situation in the Middle East, the “data that we currently see” does not create an urgency to raise interest rates from 2 per cent.
Expectations for inflation are currently contained and there have been limited knock-on effects from higher energy prices to the rest of the economy so far, he said. Oil prices had also come down from their post-Iran war peak and European gas prices are far less elevated than in 2022, he noted.