Interview with Luis de Guindos, Vice-President of the ECB, conducted by Martin Arnold

2 October 2023

It’s been two weeks since the ECB raised rates for the tenth consecutive time, have you now done enough to tame inflation?

Let me stress an issue, which is sometimes slightly overlooked but is a very important part of the discussion, namely the transmission of monetary policy. That’s crucial in order to understand the decisions that we have taken and those that we will take. In transmission you have two different legs. The first one is from our monetary policy decisions to financial markets and banks. In that first stage, the transmission is almost complete. You can see it. In the banking channel, there has been a tightening of financing conditions following our decisions. And there has been a significant drop in the demand for credit.

The second phase is how the impact of the tightening of financing conditions feeds through to the real economy. And here there is much more…