(Bloomberg) -- The European Central Bank can probably lower borrowing costs again before year-end, but shouldn’t rush to do so, according to Governing Council member Madis Muller.

“If the actual outcome ends up being close to our latest projections, then we most likely can further reduce the level of policy restrictiveness this year,” Estonia’s central-bank governor said in an interview in Sintra, Portugal. “When exactly and how much remains to be seen.”

Speaking on the sidelines of the ECB’s annual forum on central banking, Muller said “we should be patient and move very gradually, given the still high readings for core and services inflation and strong wage growth.”

Policymakers are weighing the possibility of further reductions, having cut rates last month for the first time since their hiking spree. Most urge caution, citing high uncertainty around the outlooks for inflation and economic growth.

Muller sees inflation “more or less moving along the expected path” to return to the 2% target in late 2025, but also sees dangers – including an improving economy that “might also generate some upside price pressures.”

Muller said “there is a risk of underestimating the stickiness of inflation, but we will remain vigilant.”

He also said:

• “It is likely that the economy will gradually improve, thanks to exports and domestic demand”
• “Our policy is still restrictive and it probably will be for some time to come, even if we lower rates somewhat going forward. It’s most likely that at the end of the year we will still be in restrictive territory”
• “At meetings with projections it’s possible to have a fuller discussion and it’s easier to decide on interest-rate changes. Though, I wouldn’t exclude acting at interim meetings. But it seems very unlikely that we will have the next decision already in July”

--With assistance from Joao Lima.

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