ECB’s Centeno: Data Will Determine Whether We Move by 50BP

22 October 2024

By David Barwick – WASHINGTON (Econostream) – European Central Bank Governing Council member Mário Centeno on Tuesday said that incoming information would dictate the size of the ECB’s interest rate moves.

During the Q&A following his remarks at an event of the Peterson Institute for International Economics, Centeno, who heads the Banco de Portugal, said, ‘If it’s going to be 25 [basis points] or at some point … 50, that’s something that the data will tell us.’

‘I don’t think that the Governing Council will not be considering a faster trajectory if the data tells us’ to consider one, he added.

The ECB was operating subject to the principles of data-dependency and meeting-by-meeting decision-making, he said.

‘When we look forward … we do see, and the market has that incorporated, that in the coming quarters the interest rate will go down and will converge … to levels very close to 2%’, he said.

Would the ECB’s speed of policy adjustment suffice? he asked rhetorically. ‘Data will help’, he said.

The ECB, he noted, had moved in October and thus at a non-projection meeting, putting paid to the notion that it would only move in conjunction with updated forecasts, which he said was ‘not a very clever idea’.

‘So, we really need to move steady, predictably’, he said.

‘I adhere to the baseline of our projections’, he said. ‘And we do see a soft landing and some recovery down the road.’

However, he continued, it was important for the ECB to communicate the ‘issues that we see around this baseline’, and these issues were ‘mainly tilted to the downside.’

Centeno played down a possible monetary policy response in the event that Donald Trump became US president again. ‘I think we need to look through a little bit that, because this will not be permanent somehow’, he said.

However, he also said that ‘you cannot close the borders, [implement] higher tariffs and stop immigration at the same time.'