ECB’s de Guindos: Economy, an ‘Early Indicator’ of Inflation, to Weaken Further

12 June 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Vice President Luis de Guindos said on Thursday that recent events were likely to lead to weaker economic growth, a leading indicator of how inflation might evolve.

In a speech at the annual Joint Conference of the European Commission and the European Central Bank on European financial integration, de Guindos said that the strength seen in Eurozone GDP numbers for Q1 was due to ‘temporary factors likely to revert.’

‘Survey data point overall to weaker prospects in the near term’, he said. ‘Higher tariffs and the stronger euro make it harder to export, and high uncertainty is weighing on investment.’

In the medium term growth should pick up given the support coming from the labour market, real incomes and easier financing conditions, according to de Guindos.

He noted that inflation was ‘at around’ the 2% target and said wage growth had been moderating from high levels.

After eight interest rate cuts, delivered thanks to the disinflation progress, the ECB now faced ‘exceptional uncertainty generated by geopolitical fragmentation and the volatile trade policy’, he said.

Despite the economy’s resilience to date, there were ‘challenges ahead’ due to the magnitude and frequency of shocks under high uncertainty, according to de Guindos.

‘While it is impossible to predict exactly what will happen, these developments may well have a dampening impact on growth in the euro area’, he said. ‘It is therefore important for us to closely monitor what is happening in the real economy, partly as an early indicator for the inflation outlook.’