(Bloomberg) -- The European Central Bank should steadily lower borrowing costs to 2% or thereabouts, according to Governing Council member Mario Centeno.
Acting gradually and not rushing would be optimal, the Portuguese central-bank chief said Monday — signaling his preference may not be for reductions that exceed the quarter-point pace set so far.
“Interest rates now have to normalize — this means taking them back to neutral territory,” he told a conference in Lisbon organized by CNN Portugal. “Where is neutral territory? Well something around 2%, maybe slightly below, maybe 2%.”
Centeno is among ECB officials who say a debate on bigger rate cuts may be warranted at this year’s final policy meeting in December, to stop a softer economy pulling inflation below the 2% goal.
For now, analysts and markets lean toward another quarter-point reduction in the deposit rate, bringing it to 3%, though there are increasing signs that output has begun to slide.
Price gains are already at target, according to Centeno.
“Inflation has converged,” he said. “It is as close to 2% as it can be.”
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