The European Central Bank (ECB) Governing Council member Martins Kazaks said on Friday that the eurozone's inflation is moving towards the ECB's target over the medium term of 2% but it is "not quite there yet". He also added that the policymakers need proof of that happening before reducing stimulus again.
It’s "increasingly likely" that the target will be met, Kazaks stated.
Also, he said that the labour market will be very important for whether inflation stabilises at 2%, and that the persistence of inflation will also feed into the expectation-forming mechanism. Kazaks also added that he sees there is a good chance that we will see those mechanisms kicking in, given the fact that the labour market has performed "quite nicely" so far.
He noted, however, that they continue to see that the largest weight of forecast distribution is still below 2%, so, in his view, the policymakers should wait for updated economic forecasts in March and June before making changes to the ECB's policy stance. "That’s why we will take decisions step by step and cautiously and when we revise our forecasts we will have more clarity on it," he concluded.