Governor of the Bank of Portugal: Inflation is under control, the European Central Bank should maintain interest rates at 2%.

On Wednesday evening, Mario Centeno, the Governor of the Central Bank of Portugal, expressed his views on the issue of inflation during an interview. He stated, "Overall, inflation is under control. Looking ahead to the next few months, quarters, and even a year and a half, we can foresee the inflation rate approaching significantly close to the 2% level, possibly even slightly below. Ideally, interest rates should be maintained at a level close to 2%." Centeno further explained that the recent slight acceleration in inflation is actually a delayed reflection of the significant drop in energy prices a year ago. Additionally, he explicitly stated that he will not participate in the upcoming Portuguese presidential elections in early 2026, becoming a candidate. Meanwhile, Franois Villeroy de Galhau, a member of the European Central Bank's Governing Council, also shared his views on the issues of inflation and interest rates. He pointed out that given the substantial victory in the fight against inflation, the European Central Bank should consider further interest rate cuts, with the goal of adjusting rates to 2% by the summer. This position was supported by the Governor of the French Central Bank, who believed that the neutral rate for the Eurozone (the theoretical level that neither stimulates the economy nor restricts it) is around 2%. However, it is worth noting that despite the European Central Bank having lowered the deposit rate by 25 basis points three times in a row, the current deposit rate remains at 3%. During a hearing at the French Senate's Finance Committee on Wednesday, Villeroy further elaborated on his views: "If future inflation rates can be confirmed as we predict, then adjusting interest rates to the 2% level without suppressing economic growth, and achieving this goal by next summer, would be reasonable." He emphasized that this move would help improve economic financing conditions and promote a decrease in household savings rates.