Credit will continue to become more expensive in the coming months. The Vice President of the European Central Bank (ECB), Luis de Guindos, has confirmed today that the institution plans to continue raising the official interest rate until prices stabilize, a goal that is still not close according to its projections.
De Guindos' statements come after the euro zone central bank decided last week to increase the official interest rate by 50 basis points, to 2.5%, the fourth consecutive rise in just four months, a level which had not been reached since 2008. "Will there be more rate hikes, until when? I'm honest, I don't know," said the former Spanish Minister of Economy at an informative breakfast organized by the Nueva Economía Forum.
In his speech, Guindos justified the ECB's position due to the notable worsening of its inflation projections, since he anticipates that in 2025 the 2% target will still be exceeded. In this sense, the institution focuses on keeping underlying inflation under control, especially when estimates point to a rebound in inflation in 2024, taking into account the effect that the withdrawal of the measures implemented to alleviate price increases will cause. in 2022 and 2023. "Therefore, in an environment of lower growth and worse inflation forecasts, our monetary policy actions are justified," he added.
Likewise, the vice president of the ECB has warned that if fiscal policy is not adequate, it may end up causing a "stronger" reaction from monetary policy. "If the markets begin to detect an incompatibility between the two policies, there will be rises in interest rates in the markets and this could have an impact on financial stability," he recalled.
In any case, Guindos has defended the effectiveness of the new ECB anti-fragmentation tool, known by the acronym TPI, of which he has stressed that "it is fulfilling its function without having used it".
