#Interest #rate #cuts #ECB #place #warns #Centeno
The governor of the Bank of Portugal and member of the European Central Bank (ECB) argues that inflation is more stable and that interest rate cuts could start sooner.
“I don’t think it’s necessary to wait until May to make decisions,” said Mário Centeno in an interview with the “Econostream” website.
Mário Centeno’s thinking contrasts with the thinking of other ECB members who prefer to only make a decision after receiving more data on the evolution of salaries throughout 2024.
“The decision to keep nominal rates unchanged at this time is appropriate and we will decide when to cut them sooner than we thought,” he added.
Regarding wage data, he highlighted that there is no indication that “second-round effects on wages have materialized, or will materialize, or that wages will put additional pressure on prices”.
The “variable pressure for inflation is not wages, but unit labor costs”, he argued.
Centeno pointed out that high inflation was a “temporary phenomenon” both at the level of core and underlying inflation.
“The latest inflation numbers tell us two things: one, the reduction in inflation will happen sooner than we thought six months ago, and secondly, the monetary relief process will be faster than we thought six months ago,” he said. .
