In an interview with the Financial Times, European Central Bank Vice-President Luis de Guindos urged caution ahead of the June interest rate decision, saying policymakers should wait for new staff projections, incoming data and more clarity on the Iran conflict before deciding on the next move. He said the current energy shock is not comparable to 2021-22 because interest rates are already positive, the ECB is in quantitative tightening mode, its balance sheet has been reduced and fiscal policy is in a different position, making the inflation risk lower than in the earlier episode. With hindsight, he said the ECB was late to act in 2021-22 because debate over whether inflation was demand- or supply-driven delayed decisions. De Guindos said wage tracker data and inflation expectations remain stable, with no meaningful second-round effects yet from higher energy prices, while the impact on growth, activity and consumer sentiment is likely to become more visible over the coming weeks. He warned that euro area fiscal space is limited as defence spending rises, some countries consider measures to cushion the energy shock and growth weakens, which could eventually lift yields and sovereign spreads, although the Transmission Protection Instrument has never been discussed for activation and he does not expect it to become necessary. On banking structure, he reiterated support for cross-border consolidation, said Germany's fragmented banking sector needs restructuring, and argued that governments opposing specific transactions such as UniCredit's approach to Commerzbank undermine the credibility of the savings and investments union.
European Central Bank 2026-05-11
European Central Bank Vice-President Luis de Guindos calls for prudence on June rate decision amid Iran conflict
European Central Bank Vice-President Luis de Guindos urged caution ahead of the June rate decision, stressing the need to await new staff projections, incoming data and more clarity on the Iran conflict, while saying the current energy shock poses lower inflation risk than in 2021-22. He warned that limited euro area fiscal space amid rising defence spending and possible energy support could lift yields and sovereign spreads, though the Transmission Protection Instrument has not been considered. De Guindos reiterated support for cross-border banking consolidation, urged restructuring of Germany’s fragmented banking sector and said political resistance to deals such as UniCredit–Commerzbank undermines the savings and investments union.