ECB’s de Guindos: Further Policy Tightening Impact Still in the Pipeline

13 November 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Monday said that the ECB’s monetary policy tightening had yet to be fully felt.

In a speech during the annual Frankfurt Euro Finance Week, a text of which was published to the website of the ECB, de Guindos said that ‘[f]urther tightening is still in the pipeline from the current policy stance, and it is set to further dampen demand and help push down inflation.’

The ECB’s restrictive monetary policy stance was sill in the process of being transmitted, and its effects on the economy were increasing, he said. Even so, inflation was still ‘expected to stay too high for too long, and domestic price pressures remain strong’, he said.

‘We will therefore ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary', he said.

New macroeconomic projections and data would put the ECB in a ‘better position to reassess the inflation outlook and required policy action’ in December, de Guindos said.

‘In view of the prevailing elevated uncertainty, our future decisions on policy rates will continue to be data dependent and taken on a meeting-by-meeting basis’, he said.

For the transmission of monetary policy to achieve its goal it was necessary to have a ‘resilient and well-functioning financial system’, he said. 

‘It is therefore vital that the reform of the EU’s economic governance framework is concluded, in order to anchor expectations and support fiscal discipline’, he said.