FRANKFURT, May 11 - Luis de Guindos, the European Central Bank's outgoing Vice President, has urged a cautious approach to interest rate decisions in comments published on Monday.
Speaking in an interview that appeared this week, de Guindos said he anticipated that forthcoming growth data would be disappointing and that this deterioration should temper any haste to raise policy rates.
"My impression is that the data on growth over the coming weeks are not going to be good," he told the Financial Times. "That’s why I would call for prudence: the impact on growth is going to become much more visible over the coming weeks. And we need additional clarity with respect to the conflict."
De Guindos, whose term ends at the close of May and who therefore will not attend the ECB's June meeting, made the comments as investors have come to expect a rate increase at the central bank's June 10-11 policy meeting. Market participants also anticipate one or two further hikes by next spring to address an energy-led uptick in inflation linked to the war in Iran.
The outgoing vice president's warning for restraint contrasts with messaging from other policymakers at the ECB, who have indicated a rate rise next month is likely unless there is a settlement of the conflict or a sharp fall in energy prices. De Guindos' appeal for caution highlights the tension at the bank between combating inflation and avoiding undue pressure on growth as fresh data arrive.
Context and implications
De Guindos framed his remarks around two central points contained in the interview: the prospect of weaker growth readings in coming weeks, and continued uncertainty about the trajectory of the conflict driving energy price pressure. His position was presented as a final counsel ahead of the meeting he will not attend.
The statements reiterate the factors shaping expectations for ECB policy this summer - namely, efforts to curb inflation that has been pushed higher by energy disruptions, and the balancing act required if the economic expansion softens.
Direct quotes
"My impression is that the data on growth over the coming weeks are not going to be good."
"That’s why I would call for prudence: the impact on growth is going to become much more visible over the coming weeks. And we need additional clarity with respect to the conflict."