“We’ve got no alternative however to behave,” he stated in an interview with Le Monde paper printed on Thursday. “Will increase of fifty foundation factors might turn into the brand new norm within the close to time period.”
“If we do nothing, the state of affairs can be worse as a result of inflation is without doubt one of the elements behind the present recession,”
The steps the ECB had taken thus far have been going to have an effect on inflation, “however we nonetheless must do extra”.
The ECB final week eased the tempo of its rate of interest hikes however confused that important tightening remained forward whereas laying out plans to empty money from the monetary system as a part of a dogged battle in opposition to inflation.
De Guindos additionally stated he was involved that markets may underestimate the persistence of inflation and that they could think about fiscal coverage to be incompatible with financial coverage.
Banks have a stable capital place and may stand up to a shock, de Guindos stated, including that he had extra doubts about non-banks, notably hedge funds, which have extremely illiquid belongings and collected dangerous belongings.