(Bloomberg) -- More euro-area interest-rate reductions are likely if the European Central Bank’s expectations for a further slowdown in inflation materialize, according to Governing Council member Bostjan Vasle.

“If the baseline scenario is realized and the data are favorable, then we can probably expect further rate cuts already this year, and then also next year,” the Slovenian central bank chief told Finance newspaper. “Otherwise, it would be appropriate to wait some more time with further steps.”

The ECB last week cut rates by a quarter point. It also raised inflation forecasts for 2024 and 2025 — a decision which has left investors in the dark as what to happens next. 

Speaking to Estonian lawmakers in Tallinn on Thursday, Vasle’s colleague there — Madis Muller — highlighted that borrowing costs will remain elevated despite the June move.

“In order to achieve our goal, interest rates presumably still need to stay above average for some time,” he said, adding that it’s “too early to say when next rate decreases can take place.”

Inflation accelerated in May — though at 2.6% it is far from the levels seen at its 10.6% high in late 2022. More upticks are possible, Muller said.

“As we saw in the initial euro area inflation estimate in May, the pace of inflation may temporarily accelerate again,” he said. “We aren’t at the target yet.”

Vasle agreed and cautioned that threats to consumer prices remain.

“There are still many risks that the process of disinflation could slow down,” Vasle said, citing “relatively strong” momentum in wages, economic growth and geopolitics.  

Those comments are in line with those of Bundesbank President Joachim Nagel, who late on Wednesday told a conference in Montreal that “core inflation is still very sticky.”

(Updates with Muller starting in fourth paragraph)

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