The European Central Bank needed to cut interest rates cautiously and gradually but further policy easing was likely coming, policymakers concluded last month, according to the accounts of their Dec 11-12 meeting published on Thursday.
"This cautious approach was still warranted in view of the prevailing uncertainties," the ECB said in the accounts. "Nevertheless, if the baseline projection for inflation was confirmed over the next few months and quarters, a gradual dialling-back of policy restrictiveness was seen as appropriate."
With the economy barely growing now, the ECB's focus has shifted away from excessive price growth to anaemic activity, and a growing number of policymakers now argue for rates to fall at least to a level that stops holding back economic growth.
The bank will next meet on Jan 30 and investors have fully priced another 25 basis point cut in its 3.00% deposit rate.
The benchmark is then seen dropping further later in the year to end 2025 at 2%, around the bottom end of the estimate range for the neutral rate, which neither slows nor stimulates growth.
