European Central Bank Governing Council member Mario Centeno told EconoStream that the Eurozone's May producer price index (PPI) data call into question the adequacy of the ECB's easing pace. He added that the PPI data is a concern as falling prices are precisely the opposite of inflation. "There is an underlying element in the price formation mechanism that we should worry about because the objective of monetary policy is not to bring inflation below 2% and even less to territories close to zero," the official said, stressing that the ECB has no reason to undershoot inflation, especially considering the weak growth in the euro area.
Centeno also reiterated that he expects a few more rate cuts this year if the incoming data confirm the ECB’s base scenario. He admitted that the number and magnitude of the cuts are to be determined at each of the four remaining ECB meetings, adding that the July meeting is the same as all the other meetings in terms of discussing interest rates.