RIGA, Jan 26 (Reuters) - Risks to euro zone inflation are balanced despite some recent downside surprises and even a cut in inflation projections in March would not warrant aggressive policy easing, European Central Bank policymaker Martins Kazaks said on Friday.
The ECB held rates steady at a record high on Thursday and batted back talk of cuts despite a raft of indicators showing that economic growth and price pressures are softening.
"Risks to inflation are balanced," Kazaks told Reuters on the sidelines of a conference.
"Even if we revise our inflation forecast significantly lower... even if we slide below 2% in 2025 or 2026, as long as this difference from the target of 2% is not wide and persistent, in my view we should not be reacting aggressively with rate cuts," he said. "And the reason is very high uncertainty."
Inflation has defied ECB projections for most of the past three years, leading some to question the bank's ability to forecast in such an unusual period.
Kazaks said the ECB should be patient and analyse more data on wages and their impact on underlying price growth before embarking on rate cuts.
However, the ECB should not aim for inflation below its target because its job was not to get prices to 2% on average, which would lead to an undershooting after a period of high inflation.
Kazaks argued that monetary policy is working and may be stronger than the ECB thought but patience was still in order.
"If you move too early, then the damage you do is much bigger than if you are a bit too late," Kazaks said.
Reporting by Balazs Koranyi; editing by Christina Fincher
