The vice president of the European Central Bank (ECB), Luis de Guindos, considered this Wednesday that the battle to bring inflation to 2% will still last, with the continuation of a restrictive monetary policy.
The ECB’s cycle of unprecedented interest rate hikes has, as expected, made the cost of borrowing more expensive, but “a substantial part” of the effects has not yet been felt, declared Luis de Guindos during a conference in Cyprus.
If the consequences are strongly felt in real estate activity, for the economy as a whole”there is a gap” in the transmission of monetary policy and “the essential impact of the adjustment should materialize this year and next,” he added.
The ECB will look at the economic data to be published “to determine the appropriate level and duration of a restrictive monetary policy,” he stressed.
After successive interest rate increases since July 2022, the ECB is still far from starting the debate on a possible reduction.
For now, the ECB believes that its rates have reached levels that, “maintained for a sufficiently long period, will contribute substantially” to bringing inflation to 2%, the set objective, indicated the vice president of the central bank.