ECB's Centeno Highlights Inflation Risks

In a revealing interview with Econostream, Mario Centeno, a key figure on the European Central Bank (ECB) Governing Council and Governor of the Bank of Portugal, pointed out that the primary concern for the ECB is inflation falling below the 2% mark. "Undershooting is the main risk now," Centeno emphasized, shedding light on the delicate balance the ECB seeks to maintain.

Future Rate Cuts Hang in the Balance

Centeno elaborated on the uncertainty surrounding potential rate cuts, stating, "If economic growth is flat in the next couple of quarters, investment doesn't pick up, and inflation remains close to 1%, we will have to do something." This statement underscores the ECB's readiness to act should the economic indicators not align with their targets.

Unpredictable Economic Indicators

The timing and extent of any further rate cuts remain uncertain, according to Centeno. He highlighted the dependency of such decisions on various factors including investment trends, employment conditions, and overall price levels. This uncertainty reflects the complex challenges faced by the ECB in steering the eurozone's economy towards stability and growth.