ECB’s de Guindos: Size of Cuts Is ‘Much Less Important’

22 November 2024

By Marta Vilar – MADRID (Econostream) – European Central Bank Vice President Luis de Guindos on Friday downplayed the importance of the amount by which the ECB cuts rates, reiterating that the direction of monetary policy is clear.

In an on-stage conversation at the Foro Observatorio Económico organised by El Confidencial/MAPFRE in Madrid, de Guindos said that if inflation met the ECB’s expectations next year, the direction of interest rates was ‘clear’.

‘The question of whether we cut 50 or 25 basis points is much less important’, he added.

If countries hit by US President-elect Donald Trump’s potential tariff hikes were to retaliate, that would lead to a ‘vicious circle of trade war’, he said.

‘If you put a 60% tariff on Chinese products, China will start looking for other markets and that will divert trade flows to other jurisdictions,’ he said.

History has shown that a trade war would weaken economic activity and would also have an effect on inflation, but this effect would be lower than that on growth, according to de Guindos.

Related articles:

• ECB’s de Guindos: ‘Growth Is the Main Risk We Are Facing Now’
• ECB’s de Guindos: Risks Shifted From Concerns on High Ination to Fears Over Growth
• ECB’s de Guindos: Focus On Medium Term ‘Much More Important’ Than Fine-Tuning