The European Central Bank should continue to cut interest rates gradually, its chief economist said, after policymakers last week cut borrowing costs for the second time this year.
"A gradual approach to tapering will be appropriate if incoming data are consistent with the baseline forecast," Philip Lane said in a speech in Luxembourg.
However, he stressed that policymakers should be open about the "speed of adjustment" and it would depend on how fast inflation falls and the state of the eurozone economy.
"These considerations reinforce the value of a data-driven, meeting-by-meeting approach that preserves... flexibility for future interest rate decisions," he said.
On Thursday, the bank for the 20 countries that use the euro cut its key deposit rate by a quarter point to 3.50 percent.
The ECB has raised interest rates at a record pace since mid-2022 to tame soaring consumer prices, but has begun to ease the pressure as inflation returns to its two percent target.
Signs have also emerged that the eurozone economy is weakening, intensifying calls for rate cuts.
Lane said the latest data was in line with the ECB's expectations and that the Frankfurt-based institution foresees a "demand-led economic recovery".
This has boosted confidence for a continuation of last week's reduction.
Most economists expect the ECB to keep interest rates on hold at its next meeting in October before making another cut in December.
Eurozone inflation - which peaked at more than 10% in late 2022 - cooled to 2.2% in August, its lowest level in more than three years. | BGNES
