- I think the risk of inflation is lower this time
- I think we are late to act in 2021 and 2022
- One of the reasons for this was that we had a lot of academic discussion about the drivers of inflation
- Academic discussions are fine at university and in academic forums, but in central banks, you have to make decisions
- We have to wait before deciding on the next move for interest rates
- Need more clarity on the conflict in Iran
- My impression is that the growth data over the coming weeks will not be good
- An energy shock is usually reflected in inflation indicators much more quickly than growth indicators
- That is why I call for caution. We need more clarity regarding the conflict
- I never tried to pre-empt a price decision
- Let’s see the data over the coming weeks, let’s see the forecasts, let’s see what happens with the conflict
- The market response has been very calm, which is positive
- A significant repricing in asset markets would have been extremely damaging, amplifying the impact of the energy shock
- Fiscal space is very limited in the euro area at a time when we need to increase defense spending
- Ignoring this risk would be a mistake
- Full version
As a reminder, de Guindos will see his term end at the end of this month. Therefore, he can be a little more bold in his commentary as all policy makers do when they prepare to leave the central bank.
So far, he has not said much, but he calls for patience and wisdom. But in the bigger picture, I’m sure he knows it pretty well too The ECB cannot remain idle for too long Amid shock inflation expectations.
This article was written by Justin Lu on Investinglive.com.
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