ECB’s Centeno: Recovery Delayed; We Don’t Want to Undershoot

26 September 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Mário Centeno on Thursday said that the euro area recovery had been postponed and that the ECB wanted to avoid undershooting its inflation target.

In an interview with CNBC, Centeno, who heads the Banco de Portugal, said, ‘We are focused on bringing inflation to 2%, but we don't want to undershoot the target.’

Even if a recession was not on the horizon, Centeno highlighted that the euro area economic recovery had been delayed.

‘We've been postponing the recovery', he said. 'There is no recession in the baseline, the baseline is still very solid, but we see, month after month, a postponement of the recovery.’

Recent data showed early signs of weakening in the labour market, he said. 

‘The soft landing of our economy during this period has a lot to do with the labour market conditions, so an easing in labour market conditions can signal a further deterioration of the economic conditions and that's something that we also want to avoid’, he said.  

The outlook for investment in Europe had worsened and this was having a big impact on growth, he said, adding that the situation must be taken seriously. 'We need to be careful', he said.

Asked about interest rate cuts, he said that the Governing Council would remain 'firmly data-dependent' and that there would be more data to before the October meeting.  

‘We really need to go meeting by meeting’, he said.