ECB’s Centeno: If the ECB Needs to Cut Before the Fed, ‘That’s Its Job’

17 April 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Mário Centeno on Wednesday said that it would be acceptable for the ECB to reduce interest rates before the Fed.

In an interview with Bloomberg on the margins of the spring meetings of the International Monetary Fund and World Bank, Centeno, who heads Banco de Portugal, said, ‘If the ECB, looking at inflation and the economic conditions of the euro area, has to decide to cut, that’s its job.’

‘It’s not looking at the US to see what the US does. If the Fed does something different, it’s because the Fed is facing a different economy’, he elaborated.

The ECB’s baseline was compatible with ‘several cuts’ by the end of the year, he said, which would be decided meeting-by-meeting.

‘I don’t see a single reason for us not to continue the monetary policy cycle, cutting rates eventually already in June and continuing to do so as long as inflation doesn’t derail’, Centeno said.

If the situation in the Middle East escalated and resulted in significant oil shocks, ‘everything else will have to give and adjust, so it will counteract the inflationary effect’, he said.