The European Central Bank is likely to lower borrowing costs at this month’s meeting and beyond, but some investors’ and economists’ easing expectations appear exaggerated, according to Governing Council member Martins Kazaks.

The European Central Bank has a "clear-cut" case for cutting interest rates at its next meeting as the euro zone's economy may face a tipping point, ECB policymaker Martins Kazaks told Reuters.

With eurozone disinflation broadening, markets now price in six consecutive 25bp cuts from the European Central Bank, including one in October.

Euro-area inflation slowed below the European Central Bank’s 2% target for the first time since 2021 — backing investor bets that interest rates may be lowered more quickly than previously anticipated.

Euro area inflation slowing down means that there are now more reasons to justify an interest rate cut at the ECB's October policy-setting meeting, Finnish ECB policymaker Olli Rehn said in a speech on Tuesday.

Expectations for another quarter-point rate cut by the European Central Bank are on the rise due to growing evidence of a significant slowdown in both inflation and economic activity.

The direction of the European Central Bank’s monetary policy is “clear” but any future decision on easing will hinge on data, according to Governing Council member Olli Rehn.