"Europe is paying a huge sacrifice to fight inflation. That is not the case in other jurisdictions, and we have to be very clear about this so that our stakeholders -- those to whom we address our policies -- understand us," said Mário Centeno at the "Challenges to Monetary Policy Transmission in a Changing World (ChaMP)" conference, which is taking place in Frankfurt, Germany.

For the governor of the Portuguese central bank, it is important that policymakers do not lose people's credibility in this process.

In his speech, Centeno admitted that, before the inflationary crisis, the ECB Council had revised its monetary policy to bring inflation closer to 2% and that it was willing to "temporarily tolerate inflation above 2%".

"The one thing we were not aware of was the fact that we would be approaching 2% from above and not from below, because that is where we were stuck before this whole inflationary process," said the governor, referring to an eight-year period of very low inflation.

"This was a long process of rising inflation. It took about a year since we had inflation above 2%, until it reached its peak, in October 2022," said Centeno, who considered that it was a "quite painful" period due to the sequence of shocks in energy or in supply chains.

As for the action in the euro area, the Portuguese governor pointed out that the ECB has done its part.

"The ECB has done its part. I think we should be happy with what we have done so far, but we were not alone, and the transmission channels of monetary policy work in the euro area because the economic system helped a lot and because our fiscal policies were much more contained than in other jurisdictions," he pointed out.

In this sense, Mário Centeno highlighted the impact of the labour market in Europe.

"I honestly think that Europe is today living off a dividend from the labour market, due to the way it has adjusted over these years and all these crises. The current reality is that the euro area is not growing, investment has been stagnant for a year and a half," he lamented.

The former Portuguese Minister of Finance also referred to the ECB's forecasts for the credit-to-GDP ratio, which is expected to reach "the lowest levels ever recorded in the euro area" and that the trend is unlikely to change even as inflation approaches the 2% target.

Eurozone inflation eased by two tenths in March to 2.4%, while core inflation - which excludes energy and food because they are more volatile - also fell by two tenths to 2.9%, according to data from the EU's statistics office, Eurostat.

In July 2022, the ECB began a cycle of interest rate hikes in order to control inflation. More than a year later, in October 2023, it made the first pause in this rapid cycle of hikes, but immediately warned that a rate cut would still take some time due to inflationary risks.

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