Interview with Luis de Guindos, Vice-President of the ECB, conducted by Balázs Korányi and Francesco Cánepa on 12 June 2025

16 June 2025

President Lagarde said the ECB was in a good place now. Investors and ECB watchers took that to mean a pause in rate cuts is appropriate. Was that the correct interpretation?

The projections provide the key to understanding our policy decision. It’s almost a cliché now but the level of uncertainty is huge. So much so, we published alternative scenarios. The key differences in the scenarios relate to trade policy. In the baseline, we assume no retaliation and a 10% tariff. In the adverse scenario, we assume higher tariffs and retaliation.

The final outcome in trade negotiations is by far the most relevant factor of uncertainty that we considered in our projections, which are the basis for our monetary policy decisions. Nobody knows the final outcome of the trade negotiations and the impact it may have on the outlook for growth and inflation….