Kazimir: Inflation Developing as Expected, Yet ECB Remains Vigilant

Bratislava, 15 September (TASR) – The European Central Bank’s (ECB) decision in September to leave key interest rates unchanged reflects the shared view among its governors that inflation is currently developing in line with expectations and while not committing to any specific future moves, the ECB remains alert and will make decisions gradually based on current data and forecasts, Slovak Central Bank (NBS) Governor and member of the ECB Governing Council Peter Kazimir declared on Monday. „We remain in a comfortable position, which allows us to safeguard the necessary stability in an increasingly turbulent global environment. At a time when financial markets are a major source of potential shocks and the consequences of fiscal consolidation are mixed, our goal is to support a calm and predictable environment. We are convinced this is exactly what we are doing,” said Kazimir in a commentary on the ECB’s monetary policy decision made last week. According to Kazimir, the ECB has successfully brought interest rates into a comfortable, so-called neutral zone. „But that does not mean we will passively watch what happens in the world around us. Although we have made real progress in curbing inflation – especially as its more persistent components are also declining – vigilance remains more than appropriate,” he stressed. He noted that risks have not disappeared and remain present, including those that could push inflation upward. Ignoring such risks would be a mistake and could backfire, Kazimir warned. „As in the past, we will continue to decide from meeting to meeting, based on all available data, analyses and forecasts. This will allow us to remain in the aforementioned comfortable position,” he assessed. Kazimir stated that the ECB will not react to minor deviations from its inflation target, which are certain to occur, and will instead focus on significant trends. He assured that central bankers are ready to respond appropriately to anything that may arise. „We should not, and will not, commit in advance to specific future decisions. On the contrary, we will keep all options open and be ready to adapt to the situation. We are prepared to respond to any new shocks. We have full freedom to do whatever is necessary to maintain stability,” he added. Last Thursday (11 September), the ECB, as expected, left its interest rates unchanged for the second consecutive meeting. The key deposit rate remains at 2 percent, the main refinancing rate at 2.15 percent, and the marginal lending rate at 2.40 percent. mf