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ECB’s De Guindos Cautious on Eurozone Growth, Open on Rate Options
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By Anya Sharma | SINTRA – 2025/07/01 09:38:52
European Central Bank Vice-President Luis De Guindos has expressed concerns about teh Eurozone’s economic outlook, citing uncertainty as a major impediment to growth. Speaking in an interview with Bloomberg TV at the ECB forum in Sintra, Portugal, de Guindos indicated that while a further cut of interest rates might not be the solution, all options remain on the table.
De Guindos stated,”The economy is not good. The growth rate of the euro area will be less than 1% in 2025 and slightly higher in 2026. I believe that the risks are clearly oriented down.” He pointed to flat investment and sluggish consumption as indicators of a struggling economy,suggesting that the 0.6% growth seen in the first quarter of the year was “a bit of an illusion.” He anticipates growth rates closer to zero in the second and third quarters.
the ECB vice-President emphasized the need for certainty in commercial policies,duties,and tax policy to stimulate growth in Europe. “What we need is certainty,” he asserted. “I think Europe is at a crossroads…the future is in our hands. If we begin to implement and pursue correct policies, I think Europe can begin to recover.”
On Rates Each Option is Open
De Guindos addressed the possibility of future interest rate adjustments, noting, “We have reduced interest rates eight times, going from 4% to 2%.I think, as President Lagarde indicated, we are in a good position to face the future, but the level of uncertainty is enormous.” He stressed the importance of remaining flexible and considering all available options. “I think we must remain open and keep all the options open for the future,” he said.
He also highlighted external factors contributing to the uncertain economic climate, stating, “For example – added De Guindos – after the publication of our projections, the conflict between Israel and Iran, which added a further level of uncertainty occurred.”
“What we need is certainty: certainty about commercial policies, on duties, on tax policy. This is the type of reforms we need in Europe to try to stimulate growth.”
Euro at 1.20 on “Perfectly Acceptable” Dollar
Regarding the euro’s exchange rate with the dollar, De Guindos commented that a level of 1.20 is “perfectly acceptable.” He explained that while the euro was trading at 1.17 against the dollar, he doesn’t see this as problematic. “I think the level is not a problem,” he stated.”I believe it is perfectly acceptable according to our projections. The real question is that we should try to avoid any type of excess… But I think 1.17, even 1.20 are levels that we can accept, something beyond that level would be much more elaborate. But 1.20 from my personal perspective, it is indeed perfectly acceptable.”
