(Bloomberg) -- The European Central Bank should go on cutting interest rates gradually, according to Governing Council member Martins Kazaks.
“The base scenario at the current moment — and to my mind the one that is the most appropriate — is to continue to lower rates step by step,” he told Latvia’s public broadcaster in an interview Tuesday. “The direction of rates is lower, but of course that is dependent on how the economy feels, what happens in the economy.”
The ECB has already reduced borrowing costs three times since June and is expected to do so again at its final policy meeting of the year in December. Kazaks comments come after his Finnish colleague Olli Rehn said earlier in the day that further easing next month looks likely.
Meanwhile, last week’s US election has cast a pall over the prospects of the euro-area economy, as the return of Donald Trump to the White House might also see a protectionist turn from the US.
“Tariffs won’t be good for Europe, because we are an economy that’s orientated to exports and foreign trade,” Kazaks said. “What will that most likely mean for us? Inflation could be a little bit higher, prices could rise because of tariffs, and the economy weaker because it will be harder for us to sell.”
Still, he highlighted that it’s still unclear what will actually happen and that Europe needs to avoid escalating any trade war.
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