de Guindos: We Have No Choice But To Act, 50bp Hikes May Be Norm In Near-Term

Key snippets from a Le Monde Interview with ECB Vice President de Guindos can be found below:

• "First, increases of 50 basis points may become the new norm in the near term. Second, we should expect to raise interest rates at this pace for a period of time. And third, our interest rates will then enter into restrictive territory. The steps we have taken so far are going to have an impact on inflation, but we still need to do more."
• "The best way to help governments is to reduce inflation. It is currently the main problem for many European countries. Admittedly, raising interest rates means an increase in funding costs for governments. But we have a mandate and we have to stick to it: inflation is currently at 10% and core inflation at 5%, whereas our target is 2%."
• "We have no choice, and I think not having the possibility to deviate from the target is a good thing. Because if we don’t control inflation, if we do not put inflation on a convergence trajectory towards 2%, it will be impossible for the economy to rebound."
• "Financial stability conditions have deteriorated because of lower growth, higher inflation and the tightening of financial conditions. I am concerned that markets could underestimate the persistence of inflation. Euro area inflation has decreased from 10.6% to 10.1%, but that is not enough."
• This reaffirms the central message from ECB speak delivered in lieu of the latest monetary policy decision.