Luis de Guindos highlighted that while the euro’s rise to 1.20 USD is acceptable, exceeding this level could complicate matters for policy. He affirmed that an increase in exchange rate volatility is more concerning than the current stability.
Guindos emphasized that eurozone inflation risks are balanced, with expectations for rebounding towards the 2% target supported by tight labor market conditions and wage growth. He optimistically states the ECB is nearing its inflation goals.
Markets expect only one further interest rate cut this year, aligning with ECB President Christine Lagarde’s message. Guindos stated that while ECB does not aim for a specific exchange rate, it closely monitors fluctuations impacting economic forecasts.
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