In an interview, European Central Bank Vice-President Luis de Guindos argued that central bank independence is essential to keep inflation under control and said the ECB’s current interest rate level remains appropriate given anchored inflation expectations around the ECB’s price stability target. He pointed to surveys showing consumer inflation expectations close to around 2%, highlighting services inflation as a key variable and noting that it is falling, alongside wage dynamics that are “moving in the right direction” and slower wage growth that has stabilised. He also cited reduced trade-policy uncertainty following an EU-United States trade agreement, while noting tariffs rising from 3% to around 13% for some industrial products exported by Europe and ongoing uncertainty linked to United States-China trade relations. On risks, he flagged geopolitics, high asset valuations, national fiscal policy and the growing non-bank sector, arguing that non-banks face less stringent regulation and recommending a macroprudential framework for non-banks. On fiscal conditions, he described fiscal policy as a key challenge, citing a euro area fiscal deficit of 3% of GDP and a debt ratio close to 90%, with large cross-country disparities and upcoming increases in defence spending from close to 2% to 3.5% and then 5%. He also noted that, if EU legislators approve the digital euro regulation in 2026, the ECB would be able to start issuing the digital euro in 2029, describing it as a non-interest-bearing means of payment and the digital evolution of banknotes rather than a response to cryptocurrencies.
European Central Bank 2025-11-10
European Central Bank vice-president de Guindos says policy rates are appropriate and urges macroprudential rules for non-banks
ECB Vice-President Luis de Guindos stressed central bank independence for inflation control, noting current interest rates align with targets. He cited falling services inflation, stable wage growth, reduced trade-policy uncertainty, and discussed geopolitical risks, high asset valuations, and non-bank sector concerns. He advocated for a macroprudential framework for non-banks and mentioned a potential digital euro by 2029, pending EU approval.