Finance
ECB's Kazaks Says Time Is Not Ripe for a Rate Cut
Published by Global Banking & Finance Review®
Posted on November 27, 2025
2 min readLast updated: January 20, 2026
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Published by Global Banking & Finance Review®
Posted on November 27, 2025
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleECB's Kazaks believes it's premature to discuss rate cuts as euro zone inflation may be higher than expected. Focus remains on 2026-2027 forecasts.
FRANKFURT (Reuters) -It is too early for the European Central Bank to discuss another interest rate cut as inflation in the euro zone might still turn out higher than expected, ECB policymaker Martins Kazaks said on Thursday.
The ECB halved its policy rate in the year to June as it watched price growth fall to its 2% target, but the rate has since been on hold despite projections for slightly lower inflation and moderate economic growth.
With the next ECB meeting on December 18, Kazaks said this was not the right time to cut borrowing costs as underlying inflation remained well above 2% and there were risks in both directions.
"Given the data we have received up to now, I don’t think the time is ripe for discussing a rate cut," the Latvian governor said in an interview.
ECB rate setters will receive inflation forecasts for the next three years at their next meeting and Kazaks emphasised the 2026 and 2027 numbers as more important than the ECB's initial number for 2028.
"Of course, we have to see the new projections first and I would put the stress on 2026 and 2027 because monetary policy plays out over one or two years, and a projection three years out has a wide margin of error, particularly with this level of uncertainty," he said.
The ECB's latest projections, published in September, put inflation at 1.7% in 2026 and 1.9% in 2027.
Kazaks acknowledged that the likely postponement of the European Union's ETS2 emissions trading system would "flatten" inflation but he and colleagues should also "continue to look at core inflation, which has been well above 2%".
He said downside risks to inflation such as ETS2, the dumping of Chinese goods on the European market and a possible appreciation of the euro were "much better known" but upside risks like trade fragmentation should not be discounted.
(Reporting by Francesco Canepa; Editing by Conor Humphries)
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
The European Central Bank (ECB) is the central bank for the euro and administers monetary policy within the Eurozone, aiming to maintain price stability and oversee the financial system.
An interest rate is the amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, typically on an annual basis.
Economic growth is the increase in the production of goods and services in an economy over a period of time, often measured by the rise in Gross Domestic Product (GDP).
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