The path for rates is clearly down

European Central Bank (ECB) Governing Council Member Martins Kazaks noted late Thursday that the case for European interest rates is very likely on the lower side. The Bank of Latvia Governor also hinted that further moves on rates are likely in the ECB’s upcoming meetings.

Key highlights

Domestic price pressures are somewhat sticky.

The path for interest rates is clearly down.

The inflation uptick is likely to be less severe than expected.

Must avoid doing undue damage to the economy.

We shouldn’t hold rates at high levels for too long.

The economy is the single biggest concern.

It makes sense to go step by step on ECB rates.