De Guindos gives hints about new interest rate cuts: they could come in September or December

Vice President of the European Central Bank (ECB) Luis de Guindosgave a hint about the next actions of the European Bank in relation to interest ratesand after the reduction that was made in June, the next reduction may occur at the meetings that the Board of Governors will hold in September and December, while in July rates will remain at 4.25%. This is due to the fact that in September and December the manager updates his growth and inflation forecasts and based on them you can move your chip.

“Forecasts are updated every three months; next ones in September. This is one of the most significant and interesting moments because forecasts are a very important indicator when making a decision How will interest rates change?– Luis de Guindos noted in an interview with RTVE. He admits that “in the medium term the direction is clear” but in the short term it will depend on “the data received.”

Today’s data inflation in the eurozone in Maywhich is fundamental to new interest rate movements. prices increased by 2.6% year-on-year, up two-tenths from April, according to second estimate Data published by the community statistics office Eurostat.

The annual inflation rate in the eurozone was recorded in May this is the first rebound since December 2023 and rose to its highest level since February last year. In that the entire European Unioninterannual inflation rate has reached 2.7%which is one tenth higher than the price increase in April.

In this scenario, the ECB Vice President foresees what will happen this year ““ups and downs” of the inflation rate eurozone and what they “about 2.6%” Although next year he hopes to achieve 2% target The ECB has set itself the task of reducing inflation.

“The last kilometer of the path to this 2% will be difficult, we cannot rule it out, and caution is important. The Governing Council has made it clear that we do not have a predetermined course of action, although I believe the path is clear,” he said during an interview.

One factor that could make it difficult for the ECB to achieve its goal is high uncertainty which exists in the eurozone caused by geopolitical conflicts in Ukraine and the Middle East, to which “electoral risks“, as was already evident in the fall of the French stock market after the announcement of early parliamentary elections in France, caused by Le Pen’s victory in the European elections.

However, De Guindos admitted that The liquidity situation is relatively good: “At the moment we see that in Europe there is a widening of spreads, but the liquidity situation remains good and there is no confusion in the evolution of interest rates on government bonds,” he said. .

As he has done in recent weeks, the ECB’s second member supported cross-border bank mergers Europeans will gain strength against the US and China.

“Sometimes to achieve these mergers, they have to do a national concentration so that the player is big enough to somehow make the leap overseas,” he argued.