ECB de Guindos: Will continue tightening path to overcome high inflation

ECB Vice President Luis de Guindos told lawmakers in Brussels today, “Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2% medium-term target.” Then, interest rates will be “kept at those levels for as long as necessary,” he said.

“Within less than a year we have raised the key interest rate by 375 basis points so far, stopped net purchases of bonds, and will probably stop reinvesting via the APP program from July,” he said. “And the ECB Governing Council will continue on this monetary tightening path to overcome high inflation.”

“As the energy crisis fades, governments should roll back the related support measures promptly and in a concerted manner to avoid driving up medium-term inflationary pressures, which would call for a stronger monetary policy response,” de Guindos added.

Separately, Governing Council member, Bostjan Vasle, said “Further interest-rate increases will be needed.”

“But they’ll be smaller than they were in the past. We’re approaching the level of rates that’s restrictive enough to bring inflation back toward 2%. Fiscal — including wage policy — and monetary policies will have to be linked to a greater extent than in the past,” Vasle noted.