ECB May Accelerate Rate Cuts Amid Economic Concerns

According to Odaily, the Governor of the Bank of Portugal and European Central Bank (ECB) Governing Council member, Centeno, indicated in an interview with Politico that the ECB might need to expedite its rate cuts. This comes after recent data, following last week's rate cut, suggested that economic growth and inflation could be lower than the ECB's new forecasts. Centeno emphasized the importance of minimizing the risk of keeping rates lower than expected, given the current stage of the monetary policy cycle. His comments are the clearest indication yet that a rate cut in October remains a possibility. The ECB is grappling with the challenge of determining the appropriate pace for easing policy in an environment where the economy struggles to gain momentum, yet inflation remains difficult to fully control. Last week, ECB President Lagarde hinted that no further action would be taken before December, following the second rate cut of the year. However, ECB Chief Economist Lane confirmed on Monday that policymakers should retain the option for a rate cut in October. Despite this, hawkish members of the Governing Council stressed that a significant shift would be necessary to consider consecutive rate cuts.