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Economy February 9, 2026

Kazimir Says Only Major Economic Shift Would Prompt ECB Policy Change

Slovakia's central bank governor signals status quo unless inflation or growth diverges sharply from baseline

By Leila Farooq
Kazimir Says Only Major Economic Shift Would Prompt ECB Policy Change

Peter Kazimir, governor of Slovakia's central bank and an ECB policymaker, said on Monday that only a sizeable departure from the ECB's baseline economic and inflation outlook would justify a change to the current monetary policy stance. He reiterated that inflation risks are balanced but conditional on favorable energy prices, and warned that uncertainty and volatility remain high amid a fragile economic backdrop. The ECB has kept rates unchanged since ending its rate-cutting cycle in June, and markets largely expect policy to remain steady through the year before potential rises in 2027.

Key Points

  • Kazimir said a major departure from the ECB's baseline outlook would be necessary to justify recalibrating policy; sectors affected include fixed income and banking due to interest rate sensitivity.
  • He described inflation risks as balanced but dependent on favorable energy price movements; energy and consumer goods sectors could be directly impacted.
  • The ECB has held rates since ending its rate-cutting cycle in June, reinforcing market expectations of steady policy through the year before potential rate rises in 2027; this influences bond markets and currency traders.

European Central Bank policymaker Peter Kazimir said on Monday that the ECB would need to see a pronounced change in the trajectory of the economy and inflation before considering an adjustment to its monetary policy stance.

Kazimir, who leads Slovakia's central bank and is commonly seen as a policy hawk, made the remarks in a blog post. He wrote: "Looking forward, it would take a major departure from our baseline scenario for me to consider recalibrating the policy setting." He added plainly, "For now, the baseline holds."

His comments arrive just days after the ECB decided to keep interest rates at their present levels. The policymaker reiterated the ECB's assessment that inflation risks are balanced, but emphasized that this judgement partly hinges on favorable movements in energy prices.

Kazimir highlighted opposing forces that could influence future inflation outcomes. He noted that stronger-than-expected economic growth could exert upward pressure on prices, while further appreciation of the euro could weigh on inflation by lowering import costs. In his words: "Any further appreciation will have to be evaluated against the relative strength of the euro area's economic performance and ultimately our medium-term inflation target."

He also underscored the unusually high degree of uncertainty surrounding the outlook. Kazimir said that volatility is likely to continue in the months ahead and described the overall situation as fragile.

The ECB has left interest rates on hold since it ended its rate-cutting cycle in June, maintaining its view that inflation will stay around its 2% target over the medium term. That stance has reinforced market expectations that policy will remain broadly unchanged through the rest of the year, with some participants pricing in possible rate increases in 2027.

Implications for markets and policy are conditioned on how actual inflation, energy prices and exchange rate movements evolve relative to the ECB's baseline. While Kazimir's statement does not signal an imminent shift in policy, it makes clear that a material divergence from current projections would be required to prompt reconsideration.

Risks

  • Elevated uncertainty and likely persistent volatility in the months ahead - this poses risks for financial markets and risk-sensitive sectors such as banking and asset management.
  • Stronger economic growth could push inflation higher, potentially prompting a policy response if the baseline is breached - relevant for interest-rate sensitive industries, including real estate and lending.
  • Further appreciation of the euro could reduce import costs and act as a drag on inflation, complicating the ECB's assessment of whether to alter policy - this affects exporters and multinational firms exposed to currency moves.

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