MADRID, Jul 23. (EUROPA PRESS) –
The Vice-President of the European Central Bank (ECB), Luis de Guindos, believes that the meeting of the Governing Council of the institution next September will be a “much better” time to make decisions than it was on July 18, when it was agreed to keep interest rates unchanged, given that, in addition to the inflation and wage data, the entity’s new macroeconomic projections will also be known. In an interview with Europa Press, the Spanish economist has defended that the decision to keep interest rates unchanged was taken based on the data received, which as far as inflation is concerned are practically in line with the entity’s projections, although he has admitted “a certain deterioration” in the growth data, mainly due to the political uncertainty generated after the European and French elections. “In September we will have more information and, above all, new macroeconomic projections, so we will be able to better reassess the situation of monetary policy,” said Guindos, for whom “September is a much better month for making decisions than July has been.” Until the next meeting of the Governing Council on September 12, the ECB will have two new inflation readings, corresponding to July and August, as well as wages, but above all, with the update of the macroeconomic projections of the ECB staff, which also take into account elements such as the price of oil, the evolution of the exchange rate or financing conditions. “All this information is put into the shaker every three months to update our projections, which are obviously a very important part of our decisions for the future,” said the former Spanish Minister of Economy, adding that, in these projections, it will be essential to see that inflation converges towards 2% in a stable and medium-term manner. In this regard, Guindos stressed that by expressing its desire for greater confidence, the ECB is referring to having greater confidence that inflation at the end of 2025 will be within the definition of price stability, which is an inflation rate of 2% in the medium term. “That is the fundamental element,” he said. In addition to the new projections for September, the ECB Vice President also pointed out the relevance of the data on the evolution of wages, to which the ECB is paying “special attention” as a result of the impact they may have on inflation in services, which is currently “having the most difficulty in reducing” and is at 4.1%. However, Guindos has warned that inflation until the end of the year “will be around current levels,” although he has expressed his confidence that the disinflation process will continue from the beginning of next year in view of the expectation that wage development will begin to slow down, as suggested by the surveys carried out by the institution. “Our surveys indicate that companies expect wage increases to moderate, especially from 2025 onwards,” Guindos said, explaining that the current wage increase has a lot to do with the recovery of purchasing power as a result of past inflation. “And if wage increases moderate, inflation in services, which is the most sensitive to wage developments, will also do so and that will allow us to reach the 2% inflation target at the end of next year,” he added. In addition to the macroeconomic data, the Spanish economist pointed out the stabilisation of financing conditions suggested by the latest bank lending survey published by the ECB and which shows somewhat more demand to finance consumption and an improvement in demand for mortgages, although “these are still very marginal changes”. In this sense, for Guindos the most important thing is that these are several quarters in which financing conditions and demand for credit “have not deteriorated further”. “The tightening of financing conditions peaked almost three quarters ago and, from now on, the same banks expect softer financing conditions,” he said. On the other hand, the ECB vice president acknowledges that political uncertainty in Europe has increased after the European elections and with the elections in France, which have led to a parliament without a majority, which can make it difficult to form a government and has affected the French economy, the second largest in the euro. At the same time, for the Spanish economist, the re-election of Ursula von der Leyen is an “indicator of confidence” regarding stability. In general, the ECB vice president has warned that uncertainty forces us to be much more cautious and prudent when making decisions, because “everything is much darker.” “And when you are in a dark room and you cannot see, you try to moderate your movements so as not to kick a vase,” he added. Without wishing to assess the specific situation of any particular country, Guindos believes that the important thing is that the new fiscal rules are applied, noting that in September countries have to present their medium-term multiannual plans, and in October they will have to present the budget plan for 2025. Thus, he stressed the importance of all countries respecting and implementing the fiscal framework that we have given ourselves in Europe. “It would be very negative if such respect for the fiscal rules, which were also approved only six months ago, did not occur,” he commented.