(Bloomberg) -- The European Central Bank is likely to be able to refrain from increasing borrowing costs again, according to Governing Council member Madis Muller.

“Probably we don’t need to increase rates anymore,” the Estonian central bank chief told Sakala newspaper at an entrepreneurship event on Friday. “The next decisions will depend on how the euro area economy is doing and how persistently we see that inflation is slowing,” 

Policymakers last month paused tightening for the first time since mid-2022, and the ECB is widely believed to be at peak interest rates. Still, officials have highlighted that another hike is possible — even if that isn’t their baseline scenario. 

Slowing consumer-price growth and a weak euro-area economy have pushed markets to bet on cuts in the first half of 2024, though Muller didn’t provide backing for that view.

While inflation is clearly showing a trend of slowing, it isn’t quite at the ECB’s 2% goal yet, he said, adding that high rates are a “smaller problem” than high inflation.

“Certainly interest rates will slow down consumption,” he said. “We have definitely reached a level where interest rates are restrictive for economic activity and debt activity.” 

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