ECB Rate Hike Possible But Not Likely in July, Guindos Says

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Vice President Luis de Guindos said that a rate increase by the European Central Bank is likely in July.

The end of net asset purchases should not happen in July, according to the Spanish newspaper El Correo. Rates will rise after that and may happen within weeks or months. He said that July is possible, but not likely.

Some policy makers want the first rate hike in more than a decade to come as soon as July. The decision will depend on the data and the new projections in June.

The vice president of the European Central Bank said that a significant weakening of growth was already visible.

Growth will be positive in 2022, even so, if we stick to the technical definition of a recession.

There are other key statements from the interview.

• “So far, we haven’t seen wage increases that would put” the ECB’s 2% price target over the medium term “at risk, but we have to be very attentive because this is a delayed indicator.”
• “Nominal rates for public debt have increased all over the world, but risk premia are still relatively stable. The risk of fragmentation has not materialized.”
• “With these levels of inflation, interest rates are not going to be as low as they have been in recent years, and governments need to prepare for this. The key, also from the markets’ perspective, is to have credible proposals.”