ECB’s Centeno: “We Can Look Through Below-Target Inflation for a Few Quarters”

19 September 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mário Centeno on Friday said that the ECB could disregard inflation undershooting for no longer than several quarters.

In an interview with Bloomberg, Centeno, who heads the Banco de Portugal, said, “We can look through below-target inflation for a few quarters, but at some point we will have to do something, also to avoid a de-anchoring of inflation expectations if it is for too long below target.”

“Delivering inflation sustainably below target is not our goal and wouldn’t be in line with our mandate,” he said.

The 2027 inflation projection of 1.9% reflected the upside impact of the ETS 2, the agency reported him as saying.

“But politically it’s not sure if this is really coming and it will only be a one-off,” he said. “So, under the current scenarios, I see inflation below 2% in 2028, which is the medium-term from the December projections on.”

Centeno said he still believed “that inflation risks are to the downside because the risks for economic activity are to the downside.”

In an apparent knock on the “in a good place” expression favored by ECB President Christine Lagarde, Centeno said, “We are comfortably sitting in a pile of risks. But we mustn’t become too complacent.”

Trade tensions were one of those risks, he indicated, since even with the agreement reached between the EU and the US, the issue “will probably never fully be settled given the weaponization of tariffs in the US.”