COLOGNE, Germany (Reuters) – The euro zone could face a winter recession as risks to the growth outlook are mounting, but even so, without further interest rate hikes, ECB Deputy President Louise said Not enough to lower inflation, De Guindos said Wednesday.
“The market believes the slowdown itself will lower inflation,” De Guindos said at a conference. “Actually, it’s not right. Monetary policy has to contribute.”
The European Central Bank has pledged to raise interest rates at every upcoming meeting, with the market expecting deposit rates to exceed 2.5% next year In spring, jump from the current 0.75% level.
De Guindos added that recent economic data points to a sharp slowdown, with the risk of a stagnant growth forecast by the ECB skewed to the downside.
Inflation is “very, very” high right now, Russia’s war in Ukraine may be prolonged, which could make inflation, Deguindos says Rates remained uncomfortably high for longer.
The price growth reached 9.1% last month and will increase slightly in the following months, then slowly decline, but will remain at 2024 before ECB above the 2% target.