In an interview with Politico, Portugal's central bank governor and ECB board member Luis Centeno said the ECB may have to speed up the pace of rate cuts as data released since last week's rate cut showed that economic growth and inflation may be lower than the ECB's new forecasts.
"Given where we are now, in the monetary policy cycle, we really have to minimize the risk of lower-than-expected interest rates because that is the main risk," Centeno said. Centeno's comments are the clearest sign yet that an October rate cut is still possible.
The ECB is grappling with the question of how quickly it should ease policy as the economy struggles to build momentum but also struggles to completely curb inflation. ECB President Christine Lagarde hinted last week that no further action would be taken before December when the ECB cut rates for the second time this year. Although ECB Chief Economist Ryan confirmed on Monday that policymakers "should remain selective" about cutting rates in October, hawks on the Governing Council stressed that "a major shift would be needed" to consider a continuous rate cut approach. (Jinshi)