Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- ECB policymaker Mario Centeno expressed his hopes for a quicker drop in key interest rates to 2% this year, according to an interview on Wednesday with Reuters. Currently at 2.75%, Centeno, who is also the governor of the Bank of Portugal, believes the European Central Bank (ECB) needs to reduce the rates to stimulate economic growth. He highlighted the risk of inflation falling below the bank’s 2% target as a significant concern.
Centeno suggested that the ECB might need to cut interest rates below what economists consider the neutral level, which is between 1.75% and 2.25%. This neutral level doesn’t restrict economic growth. "We may need to go below neutral," he stated, noting that if base effects were discounted, inflation would already be under 2%.
The policymaker attributed Europe’s slow growth to a lack of investment, cautious consumers, and companies not seeing satisfactory returns on their investments. He stressed the need for a balance between containing cost pressures, increasing productivity, and allowing wages to recover from inflation’s impact over the past three years.
Centeno also addressed the potential impact of U.S. tariffs on European goods, describing them as "not good news" for all parties involved. He did not dismiss the possibility of some deflationary impact from Chinese goods being redirected away from the U.S. at more competitive prices. He noted, "Tariffs on Europe, which is the most open area in modern economies today, way more open than the U.S., can be quite impactful."
Centeno emphasized the need for Europe to present a united front in any potential tariff negotiations. He also stated the importance of assessing the global impact of tariffs after March.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.