(Finance) – ECB Vice President Luis De Guindos promises “we are at the final straight on rates”. Speaking at a conference at the Menendenz Pelayo University of Santander, the number two of Eurotower explained that there was “no financial stability problem”despite the “very strong squeeze” implemented by the Frankfurt Institute, and the yields of government bonds have risen a lot, but the Spreads have remained under control.
De Guindos later admitted that “in the September meeting the decision is still open”. “We will see the data”, reiterated the banker, referring to those of inflation and GDP, “and then we will decide”. A statement that confirms that every option is open within the Board and that brings the focus back to the macroeconomic data emerging these days.
Eurozone inflation data of the month of Augustreleased yesterday, ha confirmed a growth rate of 5.3%, far from the peaks reached in 2022, but still too high for monetary policy. Core inflation, which excludes energy, food and tobacco, is also estimated at 5.3%, in line with the consensus.
De Guindos also defined rate hike “a bitter but necessary medicine”. “I know that the rate increase is reflected in mortgages and loans – she underlined – but it is the form in which the central bank” opposes inflation “which it is the absolute evil for the economic and social life of a country”.
The vice president then went over the events of recent years, stating that the economy has been through a series of shocks, starting with the pandemic and even after with the reopenings, which he compares to the transition “from freezing to heat”. In this situation, he recalled- Europe and the ECB reacted with “extraordinary measures”.