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HomeEconomyECB's Centeno urges policymakers not to rush into 'pro-cyclical' measures

ECB's Centeno urges policymakers not to rush into 'pro-cyclical' measures

Sergio Goncalves

LISBON (Reuters) – European policymakers should avoid hasty pro-cyclical measures to tackle high inflation, which is expected will slow down and converge with the ECB over time, European Central Bank Governing Council member Mario Centeno said on Thursday.

Pro-cyclical policies tend to strengthen existing conditions facing the economy, whether it be economic growth or recession.

“As consumers and policy makers, we should be concerned and act on – as consumers and policy makers – the inflation data we see. But we must also remember that in There needs to be a long-term perspective in these processes…and we should be guided by patience.”

“Pro-cyclical policies are something we should avoid,” he said, adding that greater coordination of national policies is needed , but also at the European level.

Governments typically increase spending and lower taxes during recessions, which many fear now is looming due to high inflation. But central banks are now raising interest rates in response to high inflation, an action that could exacerbate the downturn.

With euro zone inflation at record levels, policymakers fear that even longer-term inflation expectations could run above the ECB’s 2 percent target.

However, Centeno said, “The forecast of all institutions, including the Portuguese bank, is that inflation will decelerate and gradually return – possibly more slowly than we would like – to reach the same level as Europe.

Official data released on Wednesday showed that 19 the euro’s year-on-year growth rate in August increased from It accelerated to 9.1% from 8.9% a month ago.

The ECB is expected to face a choice between raising interest rates at next week’s policy meeting around 50 and 75 basis points. The ECB raised interest rates by

basis points to zero in July.



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