(Bloomberg) -- Portuguese Finance Minister Fernando Medina urged the European Central Bank to start lowering borrowing costs, saying maintaining them at their current level is a “high risk.”

“Various European countries are having a very strong slowdown,” Medina said in an interview in Sao Paulo on Thursday. “In some there’s already stagnation and recession. At this moment, the risks of leaving the situation as it is are greater than starting a process of reducing interest rates. The economy has already slowed enough.”

With inflation in retreat and the euro-zone economy struggling to gain momentum, the debate about when to start undoing the ECB’s historic rate-hiking campaign has become more intense.

ECB President Christine Lagarde said on Monday that the retreat in inflation in the euro area will continue but that she and her colleagues need to see more evidence that price growth is returning to their goal. Most policymakers have suggested cuts could start in June. 

“It would be preferable to start earlier a gradual downward process and if it’s necessary to correct it further ahead, then it’s corrected,” Medina said. “For now, keeping interest rates high is a high risk.”

Portugal’s central bank chief Mario Centeno — who was his country’s finance minister in 2015-2020 — has taken a more dovish stance than many of his Governing Council colleagues. 

He told Bloomberg last week that the ECB must be ready to consider lowering borrowing costs in March if data call for it, even if that’s only a low-probability event. 

In Portugal, a large share of mortgages have variable rates, increasing exposure to fluctuations in borrowing costs.

“The longer interest rates stay high, the longer companies will be spending reserves and their profitability will be affected,” said Medina.

He’s not the only finance minister to call for an ECB rate cut. His Italian counterpart — Giancarlo Giorgetti — told reporters in Sao Paulo that “a cut in rates could help boost growth which is low across Europe — I think I’m not the only one who shares this view.”

Similarly Bruno Le Maire of France has said that “the fight against inflation is being won,” and that Europe instead faces a growth challenge.

Data released earlier on Thursday showed both German and French inflation slowed in February. Numbers due for the entire euro area on Friday are predicted to show a reading of 2.5% — down from January’s 2.8%, but still much higher than the ECB’s 2% target.   

The Portuguese economy is projected to slow again this year, after bouncing back following the pandemic. Medina reaffirmed his forecast for 1.5% growth this year after the economy expanded 2.3% in 2023.

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