(Bloomberg) — The European Central Bank will continue lowering interest rates as the region’s economy struggles to grow, according to Vice President Luis de Guindos.
Most Read from Bloomberg
“The policy trajectory is clear, and we expect to continue to further reduce the restrictiveness of monetary policy,” Guindos said Wednesday. “The latest information suggests that the economy is losing momentum.”
In a speech in Madrid, he expressed confidence that disinflation is “well on track,” and that December’s uptick in consumer-price gains to 2.4% — further from the 2% target — was expected. While domestic inflation remains high, it’s edged down of late, Guindos said.
ECB officials including Chief Economist Philip Lane say Europe needs further monetary easing to help perk up sluggish growth. Investors see three quarter-point reductions in the deposit rate this year from its current level of 3%. They enacted four in 2024, as inflation receded following its historic spike.
“The high level of uncertainty calls for prudence,” Guindos said. “In particular, severe global trade frictions could increase the fragmentation of the world economy, uncertainty about fiscal policy and its present challenges could weigh on borrowing costs, and renewed geopolitical tensions could affect energy prices.”
He said, however, that while the near-term economic outlook remains weak, some improvement is likely looking further ahead.
“The conditions are in place for growth to strengthen over the projection horizon, although less than was forecast in previous rounds,” Guindos said.
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.