ECB’s Centeno: Should Continue Cutting Rates Gradually in Coming Months

16 January 2025

ECB’s Centeno: Should Continue Cutting Rates Gradually in Coming Months
Mário Centeno, governor of Banco de Portugal, at the European Central Bank Forum on Central Banking in Sintra, Portugal on June 26, 2023. Photo by Sérgio Garcia/Your Image for ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Mário Centeno said on Wednesday that the easing cycle should remain gradual.

In an interview with Portuguese TV RTP, Centeno, who heads the Banco de Portugal, said that the rate cuts should continue being ‘gradual over the next few months.’

However, he said that the ECB should avoid spurring demand-driven inflation again and called for more restrictive fiscal policies, profit margins for companies and wage increases.

‘The ECB interest rate will continue on a trajectory ideally towards values close to 2%, this is the expected path’, he said.

Inflation was seen converging to levels slightly below 2% in upcoming months and quarters and ‘probably a year-and-a-half’, according to Centeno.

It was already expected that inflation in the Eurozone would increase to 2.4% in December, he stated.

As for his chances of serving a second term as governor of the Banco de Portugal, Centeno said that the decision was ‘not in my hands’ as it was the Prime Minister who had to appoint the new governor.

 

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