ECB’s Kazaks Says Rates to Be Cut Further But Not Too Quickly

(Bloomberg) -- The European Central Bank will ease monetary policy further, though it shouldn’t do so too hastily due to lingering inflation risks, according to Governing Council member Martins Kazaks.

“We have at the ECB Governing Council already lowered rates two times this year, and this is not the final destination,” the Latvian central-bank head said Monday. “These rates will continue to go down.”

Borrowing costs remain “pretty restrictive,” Kazaks told Latvian public TV. How quickly they’re cut will hinge on the path for services inflation and the prospects for Europe’s stuttering economy, he said.

The ECB last week loosened policy for the second time this year — lowering its key deposit rate to 3.5% as inflation nears 2% and concerns about economic growth rise. While President Christine Lagarde says there’s no fixed path for rates and that data will driven decision, she hinted Friday that the next cut is likely in December.

“If we look at what financial markets expect — and I don’t have any serious reason not to agree with them — then by the middle of next year, rates are expected at 2.5%,” Kazaks said.