The European Central Bank has completed most of its historic monetary-tightening campaign but there remains some ground to cover, according to Vice President Luis de Guindos.
(Bloomberg) — The European Central Bank has completed most of its historic monetary-tightening campaign but there remains some ground to cover, according to Vice President Luis de Guindos.
Without revealing where he sees the peak in interest rates, Guindos said Wednesday that future ECB decisions will hinge on data in the coming months. That will include readings of underlying inflation, on which officials have increasingly focused, and which he said was more persistent than expected.
“We still have a way to go in the tightening journey,” Guindos told a banking conference in Madrid. “Surely we’ve carried out most of it, but there’s still a way to go.”
The ECB slowed the pace of its rate hikes to 25 basis points this month as its efforts to return inflation to 2% ran up against the recent banking-sector turmoil. While markets are betting on two additional increases, some Governing Council members say tightening may need to persist beyond the summer.
Euro-area banks are “weathering the storm,” according to Guindos.
“We should not be complacent, however,” he said. “Vulnerabilities persist, and we need to closely monitor the situation to safeguard financial stability.”
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