Fri Sep 20 06:00:00 UTC 2024: ## ECB Vice President Hints at Potential Rate Cuts, Acknowledges Challenges to Economic Growth
**Frankfurt, Germany** – In an interview with Expresso, Luis de Guindos, Vice-President of the European Central Bank (ECB), hinted at the possibility of interest rate cuts in the coming months, acknowledging the recent moderation in inflation and the potential for further positive economic data.
“We are fully committed to our mandate and data-dependent, taking a meeting-by-meeting approach,” de Guindos said, highlighting the ECB’s reliance on upcoming economic data to guide its decisions. While acknowledging the positive impact of base effects on September’s inflation data, he cautioned that inflation is expected to rise again in the last quarter due to similar effects.
De Guindos also addressed concerns regarding the downward revision of economic growth for the Eurozone, emphasizing that the reasons are multifaceted and not solely attributable to the ECB’s restrictive monetary policy. He expressed confidence in the recovery of consumption, driven by rising real incomes and a positive labor market. However, he identified consumer confidence as a key risk factor, highlighting the impact of political risks and uncertainty on consumer behavior.
The ECB Vice President also discussed the recent increase in consumer credit, particularly in Portugal, highlighting the potential dangers of rising debt levels. He acknowledged the moderate growth in consumer credit but reassured that the overall evolution of loans to households remains relatively contained.
Addressing the challenges posed by services inflation, de Guindos acknowledged it as the “weak spot” of inflation, attributing its persistence to strong demand and the sensitivity of the sector to rising labor costs. He expressed hope that services inflation will begin to fall as wage growth moderates and productivity improves.
De Guindos also addressed concerns about the potential impact of rising interest rates on households, stating that the ECB has already begun to ease its restrictive monetary policy and that the impact will be felt more quickly in countries with variable-rate loans, such as Portugal and Spain.
The interview concluded with discussions about the future of the Eurozone, highlighting the importance of structural reforms and investment to address the gap in economic performance compared to the United States. De Guindos expressed support for the plan presented by Mario Draghi, emphasizing the crucial role of structural reforms in bridging the investment gap.
The interview offered a comprehensive view of the ECB’s current stance on monetary policy, highlighting both the challenges and opportunities facing the Eurozone economy in the coming months.
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