BERLIN (Reuters) – Inflation is approaching the European Central Bank’s 2% target, and how much lower the rates will go depends on data confirming inflation is converging towards that target in a sustainable manner, the bank’s vice president told Slovak newspaper Hospodarske Noviny.
“We are confident that this will happen this year, but there are still a number of uncertainties, particularly surrounding the geopolitical situation, that we need to take into account,” Luis de Guindos said in an interview published on Wednesday.
“So, even if our current trajectory under the current circumstances is clear, nobody knows the level at which interest rates will end up,” he added.
De Guindos also said that estimating the threat of U.S. President Donald Trump’s economic policies to the ECB’s inflation target was more difficult than how they would affect the global economy’s growth prospects.
“Estimating the impact on inflation is more difficult owing to the dampening effect of tariffs on demand and growth, as well as the fact that selective tariffs can lead to trade being redirected and diverted,” added de Guindos.
(Writing by Miranda Murray; Editing by Ludwig Burger)
