The unprecedented tightening by the European Central Bank over the last 12 months and the policy transmission lags means "additional caution" is needed on the future action path as many economic headwinds are being cushioned by pandemic-era schemes, Bank of Portugal Governor Mario Centeno said on Friday.

"When these cushions disappear the economic impact could be much higher than we expect", he said during a press conference after the presentation of the central bank's economic bulletin.

Asked if the ECB should raise rates in September, Centeno said that in the current time ECB policymakers should probably remain quiet, in a subtle dig some of his colleagues.