Leaving the basic interest rates of the European Central Bank (ECB) at the current level is proof of caution and at the same time a well thought out step. On Monday, in response to the other ECB decision, this was stated by the Governor of the National Bank of Slovakia (NBS) Peter Kažimír. According to the head of the NBS, the unpredictability of the environment, which fogging the future development, requires extra vigilance.
“There are still risks that can print the inflation higher and therefore we must remain vigilant. For example, these pressures could arise in case of disruption of global supply chains“Kažimír approached. In his opinion, inflation does not permanently fall under a two percent tariff.” Her expected decline below the target in the following year should be temporary. There are energy prices and exchange rates, not hidden problems of the euro area economy, “he added.
The preliminary agreement between the European Union and the United States, announced on Sunday (27 July), is a welcome report, according to the NBS chief. The uncertainty dampened the mood and investor activity and eroded consumer confidence. The central bank thus has a better idea and more information about the upcoming development. Kažimír added that the ECB must retain the necessary flexibility in the future, which will allow it to respond as quickly and as credible as possible depending on the new information.
