ECB says ‘finishing line in sight’ on inflation, interest

The vice president of the European Central Bank believes that recent interest rate rises are having an impact and inflation is being tamed. But he still warned of a rocky road ahead, especially for government spending.

The vice president of the European Central Bank (ECB), Luis de Guindos, has told Spanish newspaper ABC that “monetary policy measures are starting to have an impact on financing conditions,” or in other words, recent ECB hikes in its base interest rates are starting to impact the rates paid by consumers and prompt people and businesses to take out less credit.

“The contraction in credit will pass through to the real economy,” de Guindos said. “In turn, dampening demand will lower inflation.”

De Guindos told the paper, in an interview the ECB itself shared via its own website in English and Spanish, that the ECB currently expected headline inflation to fall to 5.4% this year, 3% next year, and to be only slightly above the eurozone target of 2% by 2025.

However, he also warned the underlying inflation — excluding core goods prices like energy and food — was rising more sharply, “mainly driven by unit labor costs.”

Source: DW