12° Nicosia,
25 June, 2024

ECB VP says interest rate cuts premature

An interview with Louis de Guindos, Vice President of the European Central Bank

Newsroom / CNA

In an interview with CNA, Louis de Guindos, Vice President of the European Central Bank, expressed that discussions regarding interest rate cuts are premature. He emphasized that the ECB will maintain its data-dependent monetary stance, as the inflation target of 2% has not yet been reached. De Guindos noted that positive interest rates are considered normal, especially after the period of negative rates during deflationary pressures in the Euro area. He mentioned that rate hikes impact both the asset and liability sides of commercial banks' balance sheets.

Regarding the future moves of the ECB, de Guindos did not clarify whether the current interest rate level represents the peak of the monetary tightening cycle, citing uncertainty in the outlook. The ECB is closely monitoring wage increases in the Euro area as they may indicate additional inflationary pressures.

De Guindos praised Constantinos Herodotou, the Governor of the Central Bank of Cyprus, for his contribution to the ECB Governing Council. He also commended the progress made by the Cypriot economy and banking sector since the 2013 financial crisis.

The interview highlighted that the ECB's decisions are data-dependent, considering variables such as oil prices, euro exchange rates, and wage growth. De Guindos emphasized that maintaining positive interest rates is the norm, and discussions of rate cuts are premature until the 2% inflation target is achieved.

Watch the interview below:

Cyprus  |  ECB  |  banks  |  economy  |  inflation

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