European Central Bank policymaker Mario Centeno remarked on Friday that inflation within the eurozone is currently under control. However, he did express concerns about emerging indications of a slowdown in the labor market.
Addressing an audience at the La Toja forum in Spain, Centeno, who serves as the governor of the Bank of Portugal, emphasized, "Growth is a central issue in Europe… we have started to observe early signs of uncertainty in the labor market."
Inflation in the Eurozone is now nearing the 2 percent target, Centeno noted. As of September, Eurozone inflation decreased to 1.8 percent, marking the first occasion it has fallen below the 2 percent target in over three years. This decline has fueled speculations regarding potential expedited interest rate cuts by the European Central Bank.
Core inflation, which excludes volatile items such as food, energy, alcohol, and tobacco, decreased only slightly to 2.7 percent.
In September, the ECB reduced interest rates for the second time this year. The Governing Council, headed by ECB President Christine Lagarde, lowered the deposit facility rate—which serves as the new benchmark policy rate—by 25 basis points to 3.50 percent.
Previously, in June, the ECB executed its first interest rate cut since 2019, citing an improved outlook on inflation, followed by a pause in July. As the central bank responsible for the single currency area, it is anticipated to announce another quarter-point rate reduction during the policy session scheduled for October 16-17.