ECB’s Centeno: Downside risks have materialized

ECB Governing Council member Mario Centeno, indicated yesterday that the transmission of ECB’s policy is “up and running” and pointed out the rapidity with which inflation has decelerated, noting its descent has outpaced its ascent.

However, he urged prudence, stating, “We have to be cautious this time around because downside risks that we identified in June in our forecast have materialized.” This marks a shift from the pattern observed throughout the pandemic recovery, where, as Centeno highlighted, “usually we have been surprised on the upside.”

Centeno also hinted at the uncertainty ahead, observing, “There’s plenty of data still to be made available until the September decision.” He further emphasized the significance of the upcoming forecast, mentioning, “We have a new forecast. That forecast will tell us precisely how we see this transmission of our decisions into inflation and the economy.”