The Governor of the Bank of Spain, Pablo Hernández de Cos, today set the maximum level that interest rates can reach in the short term at 2.25% or 2.5%. This percentage is the result of the models used by the regulator and, therefore, he wanted to make it clear that in no case is it a firm commitment from the European Central Bank (ECB). The governor has made these reflections in his speech at the XXI Congress of Directors of the CEDE Foundation-Spanish Confederation of Directors and Executives.
"This is just a model-driven forecast conditional on current information. As a forecast, this range is completely data dependent and can change over time," the governor said. However, he added that "I consider it to be a valuable tool to provide citizens with some guidance on the magnitude of the adjustment we expect in our interest rates in order to comply with our mandate of maintaining stability". Currently, ECB interest rates are at 1.25%.
Although the governor has not detailed the calendar to reach that interest rate of between 2.25% and 2.5%, taking into account the planned meetings of the ECB, it is most likely that it will take place before the month of June .
Hernández de Cos has insisted that "inflation in the euro area has increased mainly as a result of energy disturbances." According to ECB estimates, they show that 75% of the increase in prices stems from energy costs.
In the speech distributed by the governor, he reflected that the ECB's will is to "stop inflation without causing unnecessary suffering to our fellow citizens in the euro area".
Right after Hernández de Cos's intervention, King Felipe gave a speech, who pointed out that "it is essential to be oriented towards the search for operational solutions in the face of so much fragility, social fractures and the absence of certain scenarios".
