A member of the European Central Bank's Governing Council and Governor of the Latvian Central Bank, Martins Kazaks, indicated that the ECB is still assessing the extent of the economic impact from the euro's appreciation beginning in 2025. In an interview, Kazaks noted that, based on estimates, the transmission of exchange rate movements typically takes around 12 months. He suggested that the full effects of last year's euro appreciation might become visible by late spring. In the first half of 2025, the euro appreciated by 14%, driven by unpredictable U.S. trade tariff policies under President Trump, which weakened confidence in the U.S. dollar and heightened global uncertainty. Earlier this year, the euro extended its gains, surpassing 1.20 dollars per euro for the first time since 2021, partly due to U.S. threats regarding Greenland. While much of the impact from the euro's strength has been incorporated into the ECB's latest forecasts—which project sustained economic growth and inflation stabilizing at the 2% target—policymakers, including President Christine Lagarde, have emphasized remaining vigilant and prepared to respond if necessary. Kazaks expressed that the current situation does not warrant any action, with officials currently in a "wait-and-see mode." He described the stance as one of attentiveness rather than verbal intervention, clarifying that it has not reached that stage. However, he voiced concern that persistent economic weakness could make it more difficult for businesses and consumers to cope. He remarked that the euro's strength over the past year appears linked more to increased uncertainty and a weaker U.S. dollar than to an improvement in the eurozone economy. Compared to the U.S. and China, Europe faces challenges related to low competitiveness. Addressing this issue, Kazaks suggested, would enhance the economy's resilience to currency appreciation. After years of urging by Lagarde and previous ECB leaders, European heads of state have begun taking gradual steps. They discussed a roadmap on Thursday aimed at strengthening the EU's economic foundations. Kazaks also stated that the ECB's current monetary policy settings are appropriate, with risks to the inflation outlook likely remaining balanced. He added that the ECB is fully prepared to act in any direction if needed, though now is not the time for such measures. Last week, the ECB maintained its deposit rate at 2%, with economists and traders anticipating no changes in the near term.