ECB de Guindos indicates final phase of monetary policy tightening

In an interview with Il Sole 24 Ore, ECB Vice President Luis de Guindos highlighted the central bank’s shift towards a more conventional monetary policy approach, stating, “We have now entered the home stretch of our monetary policy tightening path,” adding, “And that’s why we are returning to normality, to 25 basis-point steps.”

He reiterated ECB’s position that future policy decisions will be determined on a meeting-by-meeting basis, reliant on incoming data. The decisions will hinge on “the evidence of how the tightening of financing conditions has worked — and on the path of inflation, headline and core,” Guindos explained. He voiced concern over service prices, which constitute a significant portion of core inflation.

Guindos also pointed to the impact of quantitative tightening, noting it “has led to an increase of 60-70 basis points in ten-year government bond yields.”