In an interview published by the European Central Bank, Vice-President Luis de Guindos said he now leans towards prudence in monetary policy and backed the Governing Council's recent decision to wait before considering further rate changes. He said the current environment, shaped by geopolitical conflict and high uncertainty, is materially different from 2021 and 2022 and should not be treated as a repeat of the post-pandemic inflation shock. De Guindos noted that euro area inflation peaked at 10% and has since fallen to 2%, while the earlier episode coincided with a euro area budget deficit of 7%, about EUR 2 trillion of ECB liquidity injections to banks, around EUR 2 trillion of bond purchases and negative interest rates. On banking regulation, he said European banks' capital and liquidity levels are not constraining lending and have helped avoid recent banking incidents, so easing standards would risk losing a structural advantage. He also reiterated support for cross-border bank consolidation and said, in the ECB's response to the European Commission's consultation on banking sector competitiveness, the euro area should function as a single jurisdiction for banks with capital and liquidity able to move freely across borders.
European Central Bank 2026-05-03
European Central Bank Vice-President de Guindos backs prudent rate stance and defends strong bank capital standards
European Central Bank Vice-President Luis de Guindos backed the Governing Council’s decision to wait before further rate changes, citing a materially different and highly uncertain environment from the post-pandemic inflation shock. He noted euro area inflation has fallen from 10% to 2% and said strong bank capital and liquidity are supporting lending and financial stability, warning against easing regulatory standards. De Guindos also reiterated support for cross-border bank consolidation and said the euro area should function as a single banking jurisdiction, with capital and liquidity moving freely across borders.