Fabio Panetta, a member of the ECB Governing Council, has stated that the time is “fast approaching” for the European Central Bank (ECB) to lower interest rates.

He emphasized that rate hikes are having a greater impact on the economy than in the past and that the next monetary policy action should consider the pros and cons of cutting interest rates quickly and gradually.

Panetta, who was appointed governor of the Bank of Italy in November, maintained record-high interest rates at 4% last month and reiterated its resolve to combat inflation.

He argued that more evidence of inflation returning to goal is needed before any rate reductions are made.

He downplayed the inflation dangers associated with the Red Sea situation, stating that only a small percentage of industrial costs are incurred by maritime transit.