(Bloomberg) -- The European Central Bank would be ready consider ramping up monetary easing should the data suggest such a move, according to Governing Council member Mario Centeno.
“If it’s gonna be 25 or at some point we have to do 50 that’s something data will tell us,” the Portuguese central-bank chief said Tuesday in Washington. ”I don’t think the Governing Council will be not considering faster trajectory if data tells us to do that — it’s possible.”
The ECB last week lowered its key interest rate by a quarter point for a third time this year amid rapid disinflation and weaker economic activity. Investors and analysts expect a series of consecutive cuts until the deposit rate – currently at 3.25% — reaches 2% or even lower in mid-2025.
Money markets firmed bets on a half-point interest-rate reduction in December, lifting the possibility to 28% from around 20% on Monday. Looking further ahead, views remain almost evenly split between five or six 25-basis-point cuts by the end of next year.
In a speech at the Peterson Institute for International Economics, Centeno said that he sees “monetary policy as continuing this gradual, but steady, predictable path toward more neutral level for the interest rate.”
He stressed that such a neutral rate might be “at 2% or slightly below 2%,” and that the current policy rate “is still way above this neutral level, so this process is to continue.”
Speaking separately to Bloomberg Television’s Francine Lacqua, President Christine Lagarde dodged the topic of half-point moves saying she didn’t want to speculate.
Centeno, one of the ECB’s most dovish officials, said that inflation will see an uptick in the next months, he expects it only slightly above the 2% target in coming quarters.
“I see more risks in undershooting target inflation than the other way around,” he said.
--With assistance from James Hirai, Bastian Benrath-Wright, Alexander Weber and Craig Stirling.
(Updates with market reaction in fourth paragraph, Lagarde in seventh)
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