ECB’s de Guindos: Rates Appropriate, Policy to Adjust if Change in Conditions Warrants
8 January 2026
By Marta Vilar – MADRID (Econostream) – European Central Bank Vice President Luis de Guindos said on Thursday that the current level of interest rates is appropriate, adding that unexpected developments were taking place and the ECB’s monetary policy stance would adjust should circumstances change enough to warrant it.
In a panel discussion at the Next Spain Global event organized by Vocento in Madrid, de Guindos said Europe must prepare for a future in which it is no longer under the US security umbrella or at least not to the same extent as in the past, and should therefore take a more assertive approach to defense.
De Guindos said that recent developments in Venezuela had raised questions about the US policy approach, while emphasizing that it was “fundamental” for Europe to be able to confront the threat posed by Russia.
Turning to the economic outlook, he said that inflation stood at 2% and that the economy had performed better than expected in 2025. He added that GDP growth in 2026 was likely to be broadly in line with 2025, though with a high level of uncertainty.
“The impact of tariffs was not what we initially expected,” he said, pointing to the growing importance of services relative to goods in the trade balance.
De Guindos said that uncertainty surrounding the effects of tariffs has weighed on investment and consumption, both of which have recovered more slowly than projected. He suggested that a delayed impact of tariffs now appeared to be materializing moderately.
Regarding the path of interest rates, he said that the current level of rates was appropriate and that incoming data were aligned with the ECB’s projections, citing headline inflation standing at 2% and the core measure at 2.3%.
Services inflation, which was once a source of concern for the ECB, was slowing down and wage growth was evolving in line with expectations, he said.
“Obviously, the situation can change, uncertainty is very high and unexpected developments are occurring,” he said. “Given the very high level of uncertainty, if circumstances change, our monetary policy will be adjusted.”
Asked about the selection process for the next ECB vice president, de Guindos said there were many “valid” candidates but cautioned that speculation at this stage was premature. He recalled that Christine Lagarde was not widely considered a candidate before her appointment as ECB president.
“This underscores that the process involves finding a balance from many perspectives,” he said. “Trying to project the candidates at this point strikes me as premature and could result in unexpected outcomes.”
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