BoP forecasts inflation below 3%
The Governor of the Bank of Portugal Mário Centeno believes that inflation should fall to below 3% by the end of the year.
Centeno gave his opinion to Bloomberg after taking part in an economics conference in Aix-en-Provence in France which ended on Sunday.
Centeno stressed that the European Central Bank (ECB) has to closely follow underlying inflation which excludes products that suffer from price volatility such as foodstuffs and fuels-, which are at higher levels than the Consumer Price Index (IPC).
“Underling inflation is not falling as quickly as overall inflation but we have to remember that this also took longer to go up”, said Centeno. “This is why we have to retain our confidence in the way we are combating inflation”, he said.
At the conference, the governor of the Banque de France, François Villeroy de Galhau said that he believed that the maximum for interest rate hikes in the Euro Zone was close. However, he warned that this didn’t mean “a peak” but rather a “plateau of high interest rates”. He believed that high interest rates would remain at high levels for some time until the effects of monetary policy began to take effect across the whole economy.
At the same conference, the Governor of the Bank of England rejected any possibility of easing up on the 2% inflation target — which was something that Villeroy also had said regarding the ECB. “This could undermine the credibility of the Bank of England and cloud expectations”.
ANTÓNIO PEDRO SANTOS/LUSA
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