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In an interview with 20 Minutos, ECB Vice President Luis de Guindos emphasized that it is “too early” to discuss rate cuts, despite recent favorable data. He stressed that the data available are still insufficient for ECB to alter its current monetary policy stance for now.

De Guindos highlighted ECB’s data-dependent approach: “We are data-dependent. The data have been favorable but still not enough for us to change our monetary policy.”

He also expressed confidence in the current interest rate levels, stating, “If sustained for a sufficiently long period of time, current interest rates will help bring inflation down to 2%.”

Addressing the prospect of a recession, de Guindos noted that ECB does not anticipate a technical recession, defined as two consecutive quarters of negative growth. However, he acknowledged a broader structural growth issue within Europe’s economy. ECB’s projections, along with those of European Commission, foresee only modest growth of around 1% until 2026.

De Guindos identified low productivity and the energy crisis as key challenges hindering Europe’s economic competitiveness, particularly given Europe’s reliance on energy imports. He argued for the necessity of structural reforms to address these issues.

While ECB’s focus remains on reducing inflation, de Guindos emphasized that achieving growth requires a broader set of solutions: “Structural reforms are therefore necessary. The aim of monetary policy is to reduce inflation, but to achieve growth, other factors must be brought into play.”


Full interview of ECB de Guindos here.

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