Mario Centeno, a member of the European Central Bank (ECB) Governing Council, spoke about the need for further economic stimulus in the Eurozone amid weak economic indicators.
Centeno's Rate Statements
Centeno noted that interest rates must be consistent with an economy capable of sustaining stable inflation at 2%. In his view, such an economy "does not yet exist in the euro area." He added that both supply and demand remain too weak to achieve the ECB's inflation target. According to Centeno, "today GDP is below potential, which indicates that the economy is not in equilibrium."
Market Situation Ahead of July ECB Meeting
Centeno's remarks came just weeks before the next ECB meeting scheduled for July 24, where a pause in further rate cuts is widely expected. However, by that time, he may no longer be part of the council, as his term as head of Portugal's central bank ends in July. He was appointed in 2020 after serving as finance minister.
Lagarde and Trade Relations with Ukraine
Meanwhile, ECB President Christine Lagarde highlighted the importance of deepening trade ties in the region. During an unexpected visit to Kyiv, Lagarde stated that strengthening economic ties could help Europe cope with the repercussions of global economic shifts. She pointed out that most eurozone exports go to nearby countries such as the UK, Switzerland, and Norway.
The insights from ECB representatives underscore the necessity for ongoing monitoring of economic conditions and flexibility in decision-making in response to current challenges.
