ECB Vice President Luis de Guindos highlighted overnight that recent data confirms the disinflationary process is “well on track.” However, he cautioned that the outlook is clouded by “substantial risks.”
Key concerns include geopolitical conflicts that could raise energy and freight costs, extreme weather events, and persistent wage growth, all of which could prolong inflationary pressures.
On the downside, Guindos noted that previous rate hikes might impact demand and inflation more than anticipated, while a slowing global economy presents further risks.
He pointed out that economic performance has been weaker than expected, with risks skewed to the downside. “Lower confidence could prevent consumption and investment from recovering as fast as expected,” Guindos added, emphasizing that geopolitical tensions continue to threaten global trade and energy supplies.
