UPDATE 1-Bank of Portugal chief sees greater monetary policy normalcy ahead

(Adds quotes from paragraph 3 on) LISBON, Oct 6 (Reuters) – The new governor of the Bank of Portugal, Alvaro Santos Pereira, said on Monday that monetary policy in the euro zone was entering a period of greater normalcy after a streak of interest rate cuts. Santos Pereira on Monday took over as governor of the country's central bank and member of the European Central Bank's governing council, succeeding Mario Centeno. He said that in recent years, various crises and shocks "have forced euro area monetary policy to react and adapt to avoid their negative effects". The ECB has cut interest rates by 2 full percentage points in the year to June but has been on hold ever since. Policymakers are now debating whether to go even lower or level off at the current 2% rate, since inflation is now at target. "We are entering a period of greater normalcy in monetary policy, but many challenges remain," Santos Pereira said in his inauguration speech. He added that one of these challenges was defining the new framework for implementing monetary policy, "including how the new long-term liquidity operations will be carried out and how we will implement the new structural asset purchase program". (Reporting by Sergio Goncalves, writing by Andrei Khalip, editing by David Latona)

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