ECB’s de Guindos: Will Be Ready to Discuss Interest Rate Cuts in June
19 March 2024
By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Tuesday said that the ECB would be ready to discuss the reduction of interest rates in June, when more data and new projections would be available.
In an interview with Greek business daily Naftemporiki, de Guindos said that interest rate cuts hadn’t been discussed yet, adding, ‘We need to gather more information. In June we will also have our new projections and we will be ready to discuss this.’
‘We are not date-dependent – we are data-dependent. We will have to decide when to adjust our policy stance based on the data we see’, he said.
The disinflationary process was ‘very clear’ and the main risk now was the combination of high wage growth and low productivity, which mostly affected services inflation, he said.
‘And that’s why we need to wait’, he said. ‘The evolution of wages is key and most of the wage bargaining agreements will have been concluded in the first months of this year. We will have more information in June.’
Current projections indicated that inflation would converge to around 2% in 12 to 18 months and would not fall below that, he said. ‘We need to see a steady, continuous convergence of inflation towards 2%.’
The key interest rates were the main monetary policy tool, he said, noting that QE had been a response to an extraordinary situation, but could be used again if necessary.
Asked if the ECB would wait for the Fed to reduce interest rates before cutting its own, de Guindos said said that the Governing Council’s decisions were independent.
‘We monitor developments continuously, and I am quite sure that the Fed is also looking at what’s happening in Europe and at the decisions we take’, he said. ‘Central banks communicate with each other frequently, but in terms of the decisions we take, we are totally independent.’