Interview with Luis de Guindos, Vice-President of the ECB, conducted by Kolja Rudzio

31 January 2024

Mr de Guindos, Germany is in a recession, the entire euro area economy has not gained momentum for a year now. How much of this is down to the ECB?

There are three reasons for the weak growth in the euro area, the first of which is inflation. It has curtailed purchasing power, causing consumption to fall. The second factor is the noticeable slowdown in global trade. And the third is indeed the ECB’s monetary policy. When we raise policy rates, businesses and households see their financing costs increase. That results in less consumer spending, less investment and subsequently weaker growth, which in turn slows down price increases. That’s how monetary policy works.

Could you quantify the extent to which you curb economic growth through higher interest rates?

That is very hard to say. Monetary policy works with a lag. We can see that banks are already charging higher interest rates…