BofA warns Fed risks policy mistake with early rate cuts
Investing.com -- The European Central Bank (ECB) is likely to make only small adjustments to interest rates as long as economic conditions follow current projections, Governing Council member Martins Kazaks said.
Speaking Monday at the ECB’s annual retreat in Sintra, Portugal, the Latvian official indicated that any future rate movements would be modest and more likely downward than upward.
"If rates would move, then they might go down rather than up," Kazaks said in an interview. "But nothing big – the economy is growing and inflation is close to our target."
Kazaks explained that with inflation currently at the ECB’s 2% target and continued economic growth in the region, there is no need for aggressive monetary policy changes.
He noted that previous easing measures implemented since June last year are still working their way through the economy.
The ECB official suggested that any potential rate cut could serve as "insurance" to ensure inflation returns to the 2% target after potentially falling below it in early 2026.
However, he emphasized it was "too early to say given the uncertainty."
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.