ECB’s Centeno: Our Baseline Projection of Reaching 2% Inflation Includes Further Rate Cuts

7 March 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Mário Centeno said on Friday that for the ECB’s baseline projection of reaching 2% in the medium term to materialise, the institution should keep cutting rates further.

In an interview with CNBC, Centeno, who heads the Banco de Portugal, said that ‘the journey is very clear’ and that rates had been cut because of the stagnation of the Eurozone economy.

‘[W]e do have in our baseline a projection of inflation going to 2% in the medium term, but that includes further adjustment in the rates’, he said.

Centeno argued that the ECB’s monetary policy stance was ‘certainly less restrictive’, given a number of rate cuts already.

The ECB should stick to its data-dependent, meeting-by-meeting approach, he said, especially in view of the current high uncertainty.

‘The decision in April will take on board all the information we will get until then’, he said.

He considered tariffs to be a ‘tax’ on consumption and production and suggested that they would have a negative impact on economic growth.

‘[N]o one will end up gaining from a tariff war, and decisions that we will continue to make over the course of our meetings will take on board all this information’, he said.

He described himself as ‘very concerned’ about the European economy, while noting the latest downward revision to the ECB’s growth projection.

‘This was based on a lower level of exports and investment’, he said. ‘Especially investment has been quite subdued in Europe.’