Europe should urgently set up a single capital market and banking union / day

He explained that consumer price inflation in the eurozone continues to decline, retreating to 2.2%in March. Price inflation of goods remained at 0.6%. Service price inflation dropped to 3.5%. Kazak said the eurozone economy is still weak. Although the labor market is strong and the unemployment rate is low, it is gradually cooling down and the wage growth pace slows down, which will relieve prices on prices in the future.

Since the beginning of March, the value of the euro against the US dollar has strengthened by almost 10%, which will over time reduce import prices, Kazak said, explaining that the dynamics of inflation so far are largely in line with the ECB’s forecasts. Inflation was approaching 2% for targets last week, for the seventh time in the ECB Council, reduced to a 0.25 percentage point to reduce the deposit rate to 2.25%.

Kazak explains that the reduction in rates provides support for borrowers in support of consumption and investment.

« Unfortunately, the uncertainty in the global economy has grown and the main reason for this is tariff wars. It hinders trade, consumption and investment, slowing down economic growth worldwide, » Kazak said, saying that current forecasts for the eurozone are still promising about 1% growth this year. The recession is currently not a base scenario, but with potentially such voluminous changes in geopolitics and global trade, its probability is high, he stated.

Kazak emphasized that the impact on the economy comes with delay, while the financial markets respond instantaneously. The epicenter of oscillations is in the US, where the financial markets have experienced real « roller coaster » in recent weeks.

« So far, the markets have been relatively robust, but with such drastic fluctuations, especially if it has been a long -lasting negative. Financial markets are very complex, various financial instruments are closely linked and these relationships are difficult to identify, so financial crisis risks are currently the main source of potential concerns to follow.

As the Governor of the Bank of Latvia expressed, the development of events so far suggests that uncertainty is not the side effect of politics, but the opportunistic choice of US politics. This means that there are many alternative development scenarios, and the likelihood of a variety of scenarios is high and the probability of a close base scenario.

« In that case, it is quite easy for the economy to » jump from one rails to others « and go in a completely different direction. The task of European policy makers is the possibility of negative scenarios to do as little as possible and to strengthen the economic resilience and a favorable scenario for us, » Kazak said.

It is also important to invest in European security by strengthening its military industry and supporting Ukraine. As Kazak pointed out, the sooner this will be done, the faster the confidence in security and the fiscal support effect on the economy will turn on.

« It is important to immediately set up a single service market throughout Europe, including making long -term delayed political decisions to create an efficient and operational European Capital Market and Banking Union, » Kazak said, pointing out that the European problem is not a lack of money, but a lack of a unified financial market that would allocate these resources to the economy.

He explained that such a decisive behavior would enhance the resilience of the European economy, strengthen its growth and reduce negative shock vulnerabilities.

« All these factors affect monetary policies. The uncertainty is high. The stroller is not wise to run ahead if it is not known which road at the intersection will be. Therefore, as before, we will decide on the ECB council from sitting, keeping eyes open and taking into account a wide range of economic indicators.