The European economy is worried about economists – and the senior European decision -maker of the Central Bank Mário Centeno resembles this view.
“I am very concerned about the European economy”, Centeno, who is also the governor of the Portuguese Bank, said CNBC “Squawk Box Europe” on Friday.
On Thursday, ECB revised its expectations of gross domestic product compared to the euro area to 0.9% growth in 2025, compared to the previously predicted expansion by 1.1%. Seasonally corrected GDP in the euro area recently spent a 0.1% increase in the fourth quarter.
Centeno associated the revision of downward growth forecasts with reduced exports and investments, reflecting the ECB statement.
“It seems to me that a special investment is quite subdued in Europe. We will take four years to return to the level of investment in the private sector in 2023, six years in terms of housing investments (and we will be) return to 2022 levels only in 2028. ” he explained.
“These are numbers that give birth to questions about revival in Europe,” added Centeno.
The concerns about the slow economy in Europe have accelerated in recent months, after repetitive threats of tariffs from the US administration. US President Donald Trump has already introduced obligations regarding imports from several key trading partners in the USA and indicated that Europe may be another goal.
But it is Frequent political movements In the US position, with breaks, delays and dismissals that are underway negotiations and promises of mutual funds from the target countries.
“Tariffs are tax. They are tax on both consumption and production, and we know that taxes have a very clear impact on the economy, “said Centeno on Friday, warning that ultimately no one would gain a tariff war.
One bright point for Europe may be a potential push of defense expenditure from the European Union, which was introduced at the beginning of this week due to acidic relations between the US and Ukraine.
Centeno said that if such packages are “well -designed”, they can have a positive impact on the European economy.
Germany also this week Announced plans To increase expenses for infrastructure and defense, although the proposal must first transfer some obstacles to its implementation.
Further reduction in the rates in advance?
Centeno also dealt with the perspective for ECB interest rates, and subsequent signal finishes were expected in advance.
“We think that the journey is very bright, although the reductions of the rates (they have been implemented), because the European economy is in stagnation, we have a forecast of inflation up to 2% in the medium period on our basis, but this includes further correction of rates,” he said.
Centeno said that the central bank had to remain “open” and follow the approach dependent on data, especially because of the current uncertainty of economic policy.
EBC announced it on Thursday Sixth interest rate Reduce from June last year, assuming a key rate, deposit rate, another quarter lower up to 2.5%. This movement was widely expected by markets.
In the statement declaring the decision, the ECB also improved the language he used to characterize monetary policy to state that he was now “less restrictive”, a change compared to the previous “restrictive” description.
Interpretations of what this may mean for the path ahead divergent. Others stated that the Central Bank's statement indicated more cuts, but the break in the cutting cycle may now be on the horizon.
Last markets valued about 57% of the chances of stable ECB storage indicators during the April monetary policy meeting and 43% probability of further quarter reduction.
In addition to the ECB's statement, markets probably also take into account the development of tariffs and European defense expenditure in their assessment of what can come from the ECB.
“The decision in April will make all the information we will receive until then,” commented Centeno Central Bank.