MNI BRIEF: ECB's Centeno Calls For Cut As Growth Risks Mount

MNI (LONDON) - Risks to growth and a slower-than-expected recovery in consumption warrant another European Central Bank interest rate cut, Bank of Portugal Governor Mario Centeno said on Wednesday.

The ECB has succeeded in bringing inflation down but now risks hindering economic recovery and labour market resilience, he said in a presentation, as other officials noted that a return to the central bank's inflation target was becoming more likely.

“Monetary policy that remains tight for too long risks causing inflation to undershoot its target. Speed is of the essence.” (See MNI SOURCES: Chances Of October ECB Cut At Least 50-50)

China and global trade could exert deflationary pressures, while political uncertainty in Europe “without a clear political strategy to enhance the competitiveness” risks slowing the recovery in consumption.

“Achieving a better equilibrium with a stable transition path requires a gradual, steady, and predictable reduction in interest rates to their neutral level,” he said.