Interview with Luis de Guindos, Vice-President of the ECB, conducted by Michalis Psilos

19 March 2024

Inflation has been declining and the European economy has been slowing, especially the German one. However services inflation is sticky and the labour market is still tight. President Lagarde indicated in the last press conference that in June there will be enough data for the ECB to make a decision on interest rates. Is a cut likely in your view? What would you like to see first? Is there a risk of a wage-price spiral in the near future that could delay such a cut?

Looking at recent inflation developments, we can see a very clear disinflationary process. This is reflected in both headline and core inflation readings. The main risk is the combination of high wage growth, which is currently hovering around 5%, and very low productivity. These two factors together could lead to a significant increase in unit labour costs. And this is a risk, especially for services inflation, because…