ECB Vice President Luis De Guindos said in an interview that by holding interest rates steady "at their current level", ECB anticipates a significant impact on taming inflation to target of 2%.
This comes as a positive sign for the markets that have seen inflation rates soar over the past year, with a peak above 10% that has since eased to 2.9%. With core inflation also showing signs of moderation, ECB’s tightening campaign seems to be bearing fruit.
However, de Guindos emphasized a "prudent and cautious" approach because of "risks around the outlook for inflation over the next few months." This underlies ECB’s stance to consider interest rate decisions on a "meeting-by-meeting" basis, guided by unfolding economic data.
De Guindos also pointed out that "leading indicators point to the growth outlook being somewhat more negative than we previously projected." Nonetheless, he believes that inflation may align closely with their September projections.
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