ECB’s de Guindos: Must Remain “Very Prudent and Cautious” Despite Lower Uncertainty

10 November 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Vice President Luis de Guindos said on Monday that the ECB must continue to set monetary policy with prudence and caution even though uncertainty has recently eased.

In an interview with Portuguese newspaper Diário de Notícias, de Guindos said that consumer expectations of inflation were now close to the ECB’s price stability target of about 2%.

He highlighted services inflation as a key driver of overall inflation, describing it as a “headache” in recent years but now moving toward levels compatible with price stability. Wage growth, another important indicator for the ECB, was also slowing, he added.

De Guindos noted that uncertainty had been falling. In this context, he cited the trade agreement between the US and the EU, but also pointed out that tariffs will be higher than before, the consequences of which were still unclear, he said.

Chinese exports were now more competitive and had been entering the European market already, he said, which would have implications for both inflation and economic growth.

The ECB must remain mindful of risks stemming from geopolitics, elevated asset prices, fiscal policy, and the expanding non-bank financial sector, he said.

“Even though the level of uncertainty has decreased compared with six months ago, we need to take a very prudent and cautious approach to our monetary policy,” he said.

De Guindos argued that current interest rates were at the “right” level based on the trajectory of inflation, the ECB’s staff projections, and the effectiveness of policy transmission.

“If this changes, if inflation developments deviate, or if projections are modified, and if transmission is not correct, then we may change,” he said. “But so far, we firmly believe that the level of interest rates is correct.”

He said that growth slightly above 1% would be a “very positive” outcome, as it would mean avoiding a recession, though it would remain weak, with real growth below the euro area’s potential rate.