TOKYO, May 17 (Reuters) - European Central Bank (ECB) board member Isabel Schnabel said the central bank may slash interest rates in June, but advocated caution about further cuts in borrowing costs given uncertainty over the outlook, according to Japan's Nikkei newspaper.
A rate cut in June may be appropriate depending on the incoming data, Schnabel said but added that a reduction in July was unwarranted and stressed that the path beyond June was "much more uncertain."
"Recent data have confirmed that the last mile of disinflation is the most difficult," Schnabel said in an interview with Nikkei that was posted on its website on Friday.
After many years of "very high" inflation and with price risks still tilted to the upside, pushing forward the timing of rate cuts would risk easing monetary policy prematurely, she said.
"Further progress in inflation and especially domestic inflation, which is proving stickier, is needed to foster our confidence that inflation is going to sustainably return to our 2% target in 2025 at the latest," Schnabel was quoted as saying.
"We should move cautiously. We should look very carefully at the data because there is a risk of easing prematurely," she said, when asked whether the ECB should move slowly in cutting rates beyond summer, according to the Nikkei.
Schnabel, however, said geopolitical shocks such as from the escalating tension in the Middle East could pose upside risks to the inflation outlook.
She declined to comment when asked about Japan's suspected recent currency intervention to prop up the yen, the Nikkei said.
(Reporting by Leika Kihara; Editing by Christopher Cushing and Shri Navaratnam)
