The European Central Bank should cut interest rates only gradually and not lower them to a level that stimulates growth since that would not resolve the economy's deep structural faults, ECB board member Isabel Schnabel told Bloomberg.

The European Central Bank needs to be wary of cutting interest rates too far as borrowing costs are already near a level that no longer restrains the economy and going lower could backfire, according to Executive Board member Isabel Schnabel.

Officials can continue to loosen monetary policy, but should do so only gradually to avoid taking rates below the so-called neutral threshold, Schnabel said in an interview. Easing too much could squander valuable policy space, she said.