MADRID (Reuters) – The European Central Bank (ECB) has done most of its monetary policy tightening to bring inflation back to its 2% medium-term target, although the cycle is not quite over yet, ECB Vice-President Louis Durkin Doss said Thursday.
“Most part of the journey is done, but there is one last leg,” de Guindos told Spanish radio station RNE.
The European Central Bank has raised interest rates at its fastest rate ever over the past year in response to high inflation, weakening demand for bank credit and a slowdown in everything from the housing market to construction and consumer spending.
Many policymakers and financial investors still see the ECB raising rates two more times in the coming months, taking the deposit rate to 3 by July. 75%, but still inconclusive on whether further steps will be taken
De Guindos said recent inflation data from Spain, France, Italy and Germany had been encouraging, suggesting that inflation was falling, Although the rate of decline in core inflation has been slower.
“The trend is clearly pointing to a slowdown, but we are still far from our medium-term inflation target of around 2%,” De Guindos said .
While headline inflation has fallen sharply, underlying price growth is still accelerating due to strong demand for services and the sector is generally less affected by rate hikes.
