European Central Bank
ECB vice-chairman is concerned about the weak economy in the euro area
Inflation in the euro area is falling, but the weak economy is worrying the central bank. The Middle East conflict and important elections also worry the ECB. She remains tight-lipped about interest rate cuts.
The European Central Bank (ECB) is concerned about the weak economy in the euro zone and at the same time fears geopolitical risks. There is no good news when it comes to growth, said ECB Vice President Luis de Guindos in an interview with the Italian news agency ANSA, which was published on the central bank’s website.
“We are seeing the downside risks we have identified emerge, mainly because consumption is not recovering as expected,” de Guindos said. Although wages rose, households did not increase spending.
Impact of Middle East conflict and elections
In addition, there are still geopolitical risks that the central bank cannot influence, said the ECB deputy. For example, the Middle East conflict has an impact on energy prices and “upcoming elections” could have consequences for international trade, global growth and inflation. “That’s one reason why we have to be very careful in our decisions.”
De Guindos did not want to commit to key interest rate cuts, which many investors expect when the ECB makes its next decision in December.
The ECB only lowered the benchmark deposit interest rate by 0.25 percentage points to 3.25 percent in mid-October. Inflation in the euro area fell significantly to 1.7 percent in September, while concerns about the economy in the euro area grew. The ECB only expects mini-growth of 0.8 percent this year; economic indicators have recently deteriorated. In addition, the weak economy in Germany is acting as a brake.
However, there is good news when it comes to inflation, said de Guindos. The ECB is confident that it will achieve its medium-term inflation target of two percent during 2025.
dpa
Source: Stern
