LISBON (Reuters) -The European Central Bank may need to cut its key interest rate below the neutral level of 1.5%-2% to prevent inflation from falling below its 2% target in a frail economic setting,
ECB May Need to Lower Interest Rates to Maintain Inflation Target
LISBON (Reuters) -The European Central Bank may need to cut its key interest rate below the neutral level of 1.5%-2% to prevent inflation from falling below its 2% target in a frail economic setting, ECB policymaker Mario Centeno told a news briefing on Wednesday.
"We cannot run the risk of having a monetary policy that puts the inflation rate below the target of 2%," he said after presenting the Bank of Portugal's financial stability report.
The ECB interest rate, "in order to be able to keep inflation at the target of 2%, may have to come below the natural rate", he added, estimating the latter to be in the range of 1.5% to 2%.
In the face of a more uncertain environment due to the global trade tensions, "we must maintain an increasingly predictable approach and not take steps that create more uncertainty", he said, without specifying if the ECB should cut its rates again at its next meeting in June.
(Reporting by Sergio Goncalves, editing by Andrei Khalip)
