FRANKFURT (Reuters) – The European Central Bank (ECB) will only raise its main interest rate “if and when” inflation stabilizes at its 2% target and regardless of what other issuing institutions do, declared Luis de Guindos, the vice-president of the ECB, on Thursday.
“It’s natural that central banks around the world don’t necessarily start raising rates at the same time,” Luis de Guindos told a lecture at the London School of Economics and Political Science.
“We are guided by our guidance on the likely future course of monetary policy (forward guidance) and we will act if and when the conditions are met,” he added.
Inflation in the euro zone will not fall below the 2% target this year, estimated Luis de Guindos.
The consumer price index reached 5.1% in January year on year but the central bank maintains that it will return to the target by the end of the year.
“We will have our forecasts in March but I think the European Commission’s forecast seems realistic and that inflation will not fall below 2% during 2022,” he said.
The EU executive on Thursday raised its forecast for inflation to rise to 3.5%, a figure much higher than its previous estimate of 2.2%.
Luis de Guindos added that so far there has been no price-wage spiral but that negotiations between employees and employers may have simply been delayed by the pandemic.
(Report Francesco Canepa and Balazs Koranyi, French version Laetitia Volga, edited by Blandine Hénault)
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