ECB’s de Guindos: Too Early to Ease Monetary Policy

21 December 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Thursday said that it was not yet the moment to reduce interest rates.

In an interview with Spanish daily 20 minutos, de Guindos said that easing might start when indicators showed that price stability was sustainable, which was not the case yet.

‘Once we see inflation is clearly converging in a stable manner to our target of 2%, monetary policy might then start to ease. But it’s still too early for that to happen’, he said.

Avoiding any dating of when cuts might occur, he said that it was ‘too early to talk about a cut in interest rates’.

‘The data have been favourable but still not enough for us to change our monetary policy’, he said, emphasising that the ECB was data-dependent and that the current level of interest rates, if maintained for a ‘sufficiently long period of time’, would help bringing inflation to target.

Rising unit labour costs were adding to inflationary pressures, he said, and needed to be monitored.

‘We will analyse developments in wage costs and profit margins, as both factors could delay the return of inflation to our 2% target’, he said. ‘We are keeping a very close eye on this.’