By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks on Wednesday said the ECB was under no immediate pressure to raise interest rates, arguing that inflation expectations remained contained and that spillovers from higher energy prices had so far been limited.

Kazāks, who heads Latvijas Banka, said in an interview with the Financial Times that policymakers still had time to assess the fallout from the Middle East conflict, even as they remained ready to act if needed.

“Uncertainty remains very high” because of the situation in the Middle East, he said, but the “data that we currently see” does not make tighter monetary policy urgent.

“We are not in a rush,” Kazāks said. “We still have the large luxury of collecting data and forming our view.”

He said that position reflected both the limited pass-through seen so far from higher energy prices and the ECB’s success in bringing inflation back to target after the 2022 shock. Oil prices had also fallen from their post-war peak, while European gas prices remained far below 2022 levels, he noted.

The Latvian central bank chief said the conflict’s impact on the real economy was only “gradually feeding through,” adding that “many of the wounds are still very fresh” and that “every week brings something new.”

Kazāks also argued that the ECB’s earlier response to the inflation surge had left it in a stronger position now. “We delivered last time and we have been at the target for about a year,” he said, adding that the central bank’s credibility “in my view is quite strong.”

That meant policymakers could “monitor what happens and then take the decision when we have the broader picture,” he said. At the same time, he stressed that “we will of course move if we see it [is] necessary.”

Kazāks also said the ECB’s actions in 2022 had shown “very clearly” that “if necessary, we can move in bigger steps.”