ECB’s de Guindos: Appropriate to Reduce Monetary Restriction if Data Allow It

18 April 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – Monetary policy could be eased if it became more certain that inflation was sustainably declining to the European Central Bank's 2% target, ECB Vice President Luis de Guindos said Thursday.

In presenting the ECB’s Annual Report for 2023 in Brussels, de Guindos said, ‘If our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase our confidence that inflation is converging to our target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction’.

A data-based, meeting-by-meeting approach would continue to prevail, he said. ‘[W]e are not pre-committing to a particular rate path’, he added.

‘This year, economic indicators suggest that activity has got off to a weak start and will recover only gradually’, he said, predicting stronger consumer spending but continued weak private investment.

Although the financial system appeared resilient, complacency would be misguided, he said. The stability of the system 'could face significant challenges if growth prospects weakened, inflation stayed above target for a longer period or further geopolitical risks materialised.’

‘Our future decisions will ensure that our policy rates will stay sufficiently restrictive for as long as necessary’, de Guindos said.