ECB’s Centeno: September Decision Will Be Easy if Disinflation Continues

27 August 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Mário Centeno on Tuesday said that the Governing Council’s decision in September would be easy if inflation continued to move according to the projections, which had been the case so far.

In an episode of the BdP Podcast, posted on the website of the Banco de Portugal, which he heads, Centeno said, ‘[T]he "easy" part is that if inflation continues on the path it has been taking … it seems clear to me what is the trajectory that interest rates in the euro area tend to have.’

The ECB’s inflation projections were ‘fortunately’ being confirmed by data, he said.

‘We look at the trajectory of the data and not just at each data point’, he said. ‘In other words, if there are new data on employment, this is important, but it is also important and more relevant that each new piece of data is placed in this trajectory logic.’

The latest labour market data showed signs of a slowdown, while economic activity had been weak for a long time, he said, emphasising the difference between the euro area and the United States.

‘The euro area has grown by 0.7% since the rate hike cycle began, compared with 4.9% for the United States. It's a much bigger sacrifice for Europe to have won the battle over inflation in terms of economic activity than what ended up happening in the United States’, he said.