ECB’s Centeno: ‘I Expect a Few More Rate Cuts This Year’

2 July 2024

By Isabel Teles – SINTRA, Portugal (Econostream) – European Central Bank Governing Council member Mário Centeno on Tuesday said that the ECB would continue to follow its meeting-by-meeting approach and that if the data were favourable, there would be more interest rate cuts this year.

In an interview with Bloomberg Television on the margins of the ECB Forum on Central Banking, Centeno, who heads the Banco de Portugal, said, ‘I expect a few more rate cuts this year. We think that we need to follow the meeting-by-meeting strategy and hopefully the data continues to come our way.’

An interest rate cut in July was not excluded from the perspective of the ECB’s methodology, he said.

The fact that inflation expectations were anchored and inflation close to 2% in the forecast horizon was a reason for the ECB to be ‘moderately proud’, he said.

Despite a solid baseline scenario which indicated the convergence to the target, the ECB would be prepared to react to surprises, he said.

‘We need to do scenarios for risks and headwinds that may sometimes be ahead of us, and we need to be prepared to deal with them’, he said. ‘But I will remain very positive and very open, meeting by meeting, to do whatever is necessary.

The euro area indicators surprised positively in the first quarter of 2024 the ECB ‘must build on that.’

‘Our forecast is a lot sustained by a consumption increase’, he said. ‘This requires real disposable income also to increase, real wages have to catch up from the reduction that we observed during the last couple of years. For all of this to materialise, we need also policy and monetary policy to contribute.’