ECB’s de Guindos: Will Cut Rates When Data Show Convergence to 2% Inflation

28 February 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Wednesday said that the ECB would reduce its interest rates when there was enough data-based confidence that inflation was converging to target.

In an interview with Spanish television channel Antena 3, de Guindos said, ‘Interest rates will go down when we are convinced that inflation will converge to the level that we defined as price stability, which is 2%.’

Current projections indicated that the inflation target would be met by the middle of 2025, he said. ‘[T]here are positive signals, but we have to be absolutely convinced that inflation will end up converging to 2%.’

‘And once our projections indicate that the data that we receive, on both headline and core inflation, show that we are approaching 2%, then the direction of the monetary policy will change’, he said.

The ECB’s decisions remained data-dependent rather than calendar-dependent, he said.

Apart from wages and productivity, there were other factors that influenced inflation and needed to be monitored, he said.

‘There are also other types of risks, for example, everything that has to do with the situation in the Middle East, the possibility of increased oil prices, freight costs…’, he said.