MADRID (Reuters) – The European Central Bank (ECB) has gone through most of its monetary policy tightening to bring inflation back to its medium-term target of 2%, though the cycle is not quite over yet, ECB Vice-President Luis de Guindos said on Thursday.
“A big part of the journey has been done but there is still the last stretch,” De Guindos told Spanish radio station RNE.
The ECB has raised rates at its fastest pace on record over the past year to combat high inflation, weakening demand for bank credit and slowing everything from the housing market to construction and consumer spending.
Many policymakers and financial investors still see another two ECB rate hikes in the coming months, taking the deposit rate to 3.75% by July, but the jury is still out on whether further steps will be needed.
De Guindos said recent inflation data from Spain, France, Italy and Germany were encouraging and showed inflation was coming down, even though the reduction in core inflation is slower.
“The trend is clearly pointing towards a slowdown but we are still very far away from our inflation target of around 2% in the medium term,” De Guindos said.
While headline inflation has come down sharply, underlying price growth is still accelerating on robust demand for services, a sector normally less affected by rate hikes.
(Reporting by Jesús Aguado; editing by Inti Landauro)
