Kazaks: ECB will continue to decide meeting by meeting, based on incoming data

The European Central Bank Governing Council member Martins Kazaks said in a presentation during an event on Thursday, the central bank will continue to decide meeting by meeting and on the basis of incoming data.

Additional takeaways

No immediate policy action in April does not imply a looking-through approach to current inflation episode.

Stagflation is not part of the current baseline.

Inflation likely to remain elevated for some time, even if the Middle East conflict were to be resolved quickly.

The longer the shock persists, the greater the risks of second round effects and inflation expectations climbing up.

Preserving anchored inflation expectations is the immediate priority for monetary policy

Large and persistent inflation deviations would not be tolerated under the ECB’s monetary policy strategy.

We are moving away from the March 2026 baseline.

Financial-market inflation expectations remain broadly anchored.

Financial markets have tightened financing conditions, supporting policy transmission, but for sustained effect this needs to be reinforced by monetary policy.

Underlying inflation indicators are stable so far despite external price shocks, while the ECB wage tracker pointed to slower wage growth ahead.

Fiscal policy remains a possible source of additional inflation pressure.

Over time, weaker growth could require policy to move in the other direction if it intensified downward pressure on medium-term inflation.

Market reaction

At the time of writing, EUR/USD is largely flattish on the day, still defending the 1.1700 level.