(Bloomberg) -- European Central Bank Governing Council member Martins Kazaks said the size of interest-rate reductions could be increased should economic developments warrant it.
While the Latvian official sees a gradual, step-by-step approach as appropriate, he warned that shocks from geopolitics to wars could yet give inflation a “new impetus.”
“If necessary, the step can also be larger than 0.25%,” Kazaks said Friday in a blog post. “The current approach – data-based and analysis/decision-making from meeting to meeting – is well suited for this.”
Kazaks also said:
- “The future direction of interest rates is also clear – downwards”
- Neutral rate is closer to 2% than 3%, “so a significant reduction in rates is still necessary”
- Read more: ECB Cuts for Third Straight Time to Prop Up Flagging Economy
--With assistance from Mark Schroers.
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