Yahoo Finance ECB’s Guindos Says Quarter-Point June Cut Is ‘Prudent Approach’
(Bloomberg) -- European Central Bank Vice President Luis de Guindos said a quarter-point interest-rate cut next month looks reasonable, according to an interview with Oberösterreichische Nachrichten.
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“We have been very transparent about the decision at the June meeting,” he said. “And we are taking a prudent approach, which would argue in favor of a reduction of 25 basis points.”
“There is a huge degree of uncertainty. We have made no decisions on the number of interest rate cuts or on their size. We will see how economic data evolve.”
Asked if rate hikes were possible, Guindos said “that is not our base scenario.”
“It depends on how inflation develops. We believe that it will fluctuate in the short term and will sustainably converge to our definition of price stability, i.e., 2%, in 2025.”
“But there are some risks: how wages are evolving, what is happening with productivity, unit labour costs and declining profit margins, to name the main factors. Added to that are geopolitical risks and uncertainties – Russia’s war in Ukraine, the conflict in the Middle East, possible tensions in Southeast Asia. We must remain very cautious. Nothing is predetermined with regard to cuts or changes in interest rates.”
For full interview on ECB website, click here
--With assistance from Laura Malsch.
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