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ECB's Guindos: Central bank sees private credit as one key ... - FXStreet
European Central Bank (ECB) Vice President Luis de Guindos said during the European trading session on Tuesday that the central bank sees private credit as one of the sources of risk to financial stability alongside high market valuations and loose fiscal policy in some countries, Reuters reports.Market reactionThere seems to be no impact of ECB Guindos' comments on the Euro (EUR), as they seem to lack any cues regarding the monetary policy outlook. As of writing, EUR/USD trades 0.2% lower to near 1.1760 as US Dollar (USD) trades firmly. ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic. Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
ECB must keep cool head on rates amid Iran war, de Guindos says
European Central Bank (ECB) Vice-President Luis de Guindos arrives at the Presidential Palace for a meeting with Cyprus President Nikos Christodoulides in Nicosia, Cyprus, October 4, 2023.... Purchase Licensing Rights, opens new tab Read moreSummaryDe Guindos calls for caution on ratesSees stability risk from private creditFRANKFURT, April 21 (Reuters) - The European Central Bank must be cautious when setting interest rates, given the great uncertainty associated with the war in Iran, ECB Vice-President Luis de Guindos said on Tuesday. Sign up here.De Guindos, too, called for caution and said the ECB should focus on whether more expensive oil and gas were raising other prices."I believe we need to be cautious, keep a cool head and analyse the data in a context of tremendous uncertainty," de Guindos told an event in Spain.He echoed colleagues in saying that energy prices were at present between the ECB's baseline projections, which only see a temporary rise in inflation, and an adverse scenario with larger and more enduring spillovers.De Guindos also warned about three sources of risk to financial stability in the euro zone: high market valuations, loose fiscal policy in some countries, and trouble in private credit.He is due to present the last Financial Stability Review of his mandate as an ECB board member on May 27, before stepping down at the end of that month.Reporting by Francesco Canepa; Editing by Aidan Lewis and Hugh LawsonOur Standards: The Thomson Reuters Trust Principles., opens new tab
ECB's De Guindos urges caution on rates ahead of April 2026 meeting
ECB Vice-President Luis de Guindos advised caution on interest rates ahead of the April 30, 2026 policy meeting, and the Polymarket contract for a 50+ bps rate decrease at that meeting sits at 0.1% YES. De Guindos' comments match what the market has already priced in.
ECB's de Guindos: ECB has to keep cool head, be cautious on rates
ECB Vice President Luis de Guindos suggests the central bank has to maintain a "cool head" and be cautious on interest rates adjustments amid the geopolitical uncertainty. While headline inflation has recently spiked to 2.6% due to the US-Iran war, core inflation moderated further towards the 2% target (2.3% in March).
