(Bloomberg) — European Central Bank Governing Council member Mario Centeno warned his colleagues that there’s a risk of raising interest rates too far.
(Bloomberg) — European Central Bank Governing Council member Mario Centeno warned his colleagues that there’s a risk of raising interest rates too far.
The Bank of Portugal chief has been a recent standard-bearer for doves among policymakers who will decide on Sept. 14 whether to lift borrowing costs again, or if a pause in tightening is warranted.
“In the monetary dimension, the risk of ‘doing too much’ begins to be material,” the governor said in an analysis piece published on his central bank’s website on Monday. “Inflation has been reducing faster than it rose, and the economy is adjusting to new financial conditions.”
Centeno’s remarks point to a hardening position against a rate hike, building on his comments last month at the Federal Reserve’s Jackson Hole retreat in Wyoming that officials should be “cautious” because “downside risks” to the economy are materializing.
By contrast, hawkish colleagues are returning to the fray to seek further tightening after inflation data showed consumer-price growth in the euro zone still holding above 5%.
On Saturday, Belgium’s Pierre Wunsch spoke out to say “we maybe need to do a little bit more,” following similar words from Austria’s Robert Holzmann. Bundesbank President Joachim Nagel, another hawk, will speak later on Monday, as will ECB chief Christine Lagarde.
Policymakers have only until close of play on Wednesday to publicly debate monetary policy before a pre-decision blackout period kicks in.
(Updates with full quote in third paragraph)
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