THE Interest rates Will they continue to be cut? According to the vice -president of the European Central Bank, Luis De Guindos, in an interview with Spanish TV Tve, the decision will be made on the basis of the data that will be collected in recent months. “Our expectation is that inflation continues to decrease, even if it is important to be cautious, in this environment of uncertainty. But the trajectory is clear, ”he added.
Inflation estimates
Words that are added to those always by De Guindos, when last Thursday he had said that the European Central Bank is on the right way to further cut interest rates, given that the recent data of the euro area showed how inflation is on the good road to achieve the goal of 2%. Considering that at the end of 2022 it was 10% and now it is 2.5%, the situation is much more peaceful and in the next ECB meeting there is no further cut of the rates. “As inflation is being moderate, the ECB is reducing interest rates. We have reduced them 5 times by 1.5%, “he observed.
Recent news about inflation in the euro area have been “good”, albeit “not so good” on economic data. “Inflation has fallen a lot, all the underground inflation indicators are going in the right direction (…) but now there is an element of uncertainty about the services”.
The ECB cut its key interest rate of 25 points at 3.25% last month, its third cut this year. TO March There will be the second meeting of the year and it will decide if and how much to reduce interest rates and how to report their plans to investors.
Will the duties increase inflation? De Guindos’ words
But i duties Could Donald Trump imposed consequences? On this question it is difficult to answer; For De Guindos the commercial duties announced by the US President could generate economic uncertainty, but the impact on inflation is instead less clear. Trump’s plan to introduce a 25% duty on all imports of steel And aluminum In the United States, in addition to those already existing on metals, it marks a further escalation of its commercial policy.
“Today we woke up with the issue of steel and aluminum – said De Guindos to the Spanish broadcaster Tve – In addition to the geopolitical risks, I believe that the policy of the new US administration obviously creates a situation of great uncertainty”. According to the Vice President of the ECB, the introduction of duties would cause a “offer shock”, with “significant” repercussions on global economic growth.
“The effect on inflation It is not equally clear (…) since any slowdown in economic activity would immediately reduce inflationary tensions, “explained De Guindos, underlining the importance of avoiding a commercial war and adopting a prudent approach from Europe regarding the possible commercial duties imposed by the United States.
The forecasts for 2025
For 2025, further cuts in rates are expected, even more incisive than what is currently planned by the market: this is the perspective outlined in the “Outlook 2025, Time to Deliver: the world to the proof of the facts”, drawn up by Ersel Privata Banca .
The report indicates a reference rate of1.75% As an objective for 2025, less than 2% (equal to four cuts from current levels) provided by the market. For the Fed, however, the expectations of the market, starting from mid -December, quickly incorporated the positive effect of the policies announced by the new president Trump on growth, now reaching only one cut by the end of the 2025.
