The ECB’s de Guindos says that interest rates might keep going up at the same rate for a while.
Vice-President Luis de Guindos said that the European Central Bank might keep raising interest rates at the same rate for a “period of time” to slow down inflation.
In an interview with Le Monde, which came out on Thursday, he said, “We have no choice but to act.” “In the near future, increases of 50 basis points may become the new norm.”
“If we don’t do anything, the situation will get worse because inflation is one of the reasons why we’re in a recession right now,”
Related: The euro went up as De Guindos joined the ECB chorus. The ECB is predicting a rate rise in July.
The ECB’s actions so far will have an effect on inflation, but “we still need to do more.”
Last week, the ECB slowed down the rate at which it was raising interest rates, but it made it clear that there would still be a lot of tightening to come. It also laid out plans to drain cash from the financial system as part of its fight against inflation.
De Guindos also said that he was worried that the markets might not realise how long inflation would last and that they might think that fiscal policy and monetary policy don’t go together.
De Guindos said that banks have strong capital and can handle a shock, but he had more doubts about non-banks, especially hedge funds, which have a lot of risky assets that are hard to sell quickly.
