ECB’s Centeno: Next Rate Move to Be Down If Disinflation Continues

1 February 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Mário Centeno on Thursday said that if the disinflationary process continued in the coming months, the ECB’s next move would be to cut interest rates, though it was not clear when this would be.

Speaking at Fórum Banca in Lisbon, Centeno, who heads Banco de Portugal, said, ‘If inflation maintains the path it has taken so far in the coming months, it is expected that the ECB's next decision will be a decision to cut rates. We don't know when that will happen, but we know the direction of the policy.'

‘I am sure that if this materialises and if inflation gives us, from the point of view of monetary policy, this space to act, we can begin a cycle of normalisation of rates close to their neutral level’, he added.

Tight financial conditions would still be felt, even when the normalisation process started, but would gradually loosen, he said.

‘Monetary policy is obviously having its effect, this can be seen very clearly in the interest rate rises... it is reaching a level of stabilisation and will eventually decline’, he said.