By Marta Vilar – MADRID (Econostream) – European Central Bank Vice President Luis de Guindos said on Tuesday that the ECB’s monetary policy “must be prudent” and keep a “cool head,” stressing the importance of closely monitoring developments in the Middle East conflict.
Speaking at an event hosted by Spanish newspaper La Razón in Madrid, de Guindos said that the ECB’s policy stance was currently shaped by the situation in the region.
He said that prior to the conflict, the European economy had been performing better than expected, with inflation around 2%.
“The war is having two effects: first, driving up energy prices—how that will feed into overall prices remains to be seen—and second, creating a new source of uncertainty,” he said.
De Guindos said that monetary policy should remain “prudent”, adding that the ECB must carefully follow how the conflict evolves, including its duration and economic consequences.
He pointed to recent disruptions involving repeated openings and closures of the Strait of Hormuz, underscoring the need for caution. The ECB, he said, should “maintain a cool head and assess incoming data in a highly uncertain environment.”
Energy, petrochemical and aluminium prices had so far moved broadly in line with the ECB’s baseline projection, he said, noting that current conditions fell somewhere between the baseline and a more adverse scenario.
Asked about the possibility of former Banco de España Governor Pablo Hernández de Cos succeeding ECB President Christine Lagarde, de Guindos described him as a “strong candidate,” while noting that any appointment would depend on factors such as timing and backing from the Spanish government.
“What I hope is that Spain will retain the seat [in the Executive Board] that it is set to lose in a month,” he said.
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