ECB’s de Guindos: High Possibility of Inflation Converging to 2% Before Too Long

15 September 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Friday said that with interest rates at their current level, the euro area could return to price stability before too long.

‘With this hike, and with the hikes that we have carried out in recent months, we are ultimately reaching a level that over time we believe will be a very important contribution for inflation to return in the coming quarters to a level consistent with price stability, which is 2%’, he said.

The ECB would continue to take into consideration the data that become available, including the important staff macroeconomic projections, in setting monetary policy, he said.

But we believe that with the current level, if it is maintained for a while, there is a high possibility that in before too long, inflation will converge to 2%’, he said.

Rate cuts this year would be ‘very soon’, he said. ‘I think inflation is going to continue to decline, both headline and core inflation. The markets are betting; the markets can be wrong. They are based on a series of hypotheses that sometimes do not come true, that we will start to lower rates in June '24. Well, it is a bet; it may be right, it may not be right.’