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ECB's de Guindos: June hike uncertain, supply shock to hit growth

Created at 31 May · 2:22 PM6 sources↑ Market-relevant6 events
IN SHORT

ECB Vice President Luis de Guindos stated a global supply shock will affect inflation before growth, potentially tempering economic expansion. He warned that a possible June rate hike might not be followed by another move, highlighting the uncertainty for the ECB's June 11 meeting.

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Key Numbers

June 11ECB monetary policy meeting date

Who's Involved

Luis de Guindos
European Central Bank Vice President
European Central Bank
Central bank considering monetary policy actions
ECB's de Guindos: June hike uncertain, supply shock to hit growth

↳ Why This Matters

Central banks globally are grappling with persistent inflation and the potential economic impact of geopolitical events. Statements from high-ranking officials like ECB Vice President Luis de Guindos offer insights into the complex decision-making process regarding interest rates, balancing inflation concerns with risks to economic growth. The ongoing Middle East conflict adds a layer of uncertainty, particularly regarding energy prices and supply chains.

Key facts

  • ECB Vice President Luis de Guindos stated a global supply shock will affect inflation before growth.
  • De Guindos warned that a possible June rate hike might not be followed by another move.
  • He described the supply shock as affecting goods beyond energy, worsening terms of trade.
  • The shock is expected to significantly temper economic growth through consumption and investment.
  • The ECB will consider new macroeconomic projections and information on the Middle East conflict for its June 11 meeting.

Central banks globally are grappling with persistent inflation and the potential economic impact of geopolitical events. Statements from high-ranking officials like ECB Vice President Luis de Guindos offer insights into the complex decision-making process regarding interest rates, balancing inflation concerns with risks to economic growth. The ongoing Middle East conflict adds a layer of uncertainty, particularly regarding energy prices and supply chains.

Frequently asked questions

De Guindos believes the current situation is a global supply shock that will impact inflation first and then economic growth. He noted it affects goods beyond energy and will temper consumption and investment.

De Guindos warned against assuming that a possible rate hike at the June 11 meeting would necessarily be followed by another move, highlighting the uncertainty.

The ECB Governing Council will consider new macroeconomic projections and more information on the Middle East conflict, which is described as the 'great unknown'.

He described the current situation as a dilemma for central banks, balancing the impact of supply shocks on inflation and growth.

What Happens Next

01ECB Governing Council meeting on June 11 to decide on interest rates.

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Cadence
CME Headlines
  • 10-Year Treasury Note yields rose on Middle East supply risks.
    8 Jul · 8:03 PM
  • 10-Year Treasury Note yields rose on Middle East supply risks.
    8 Jul · 8:03 PM
  • Japanese Yen futures fell near multi-decade lows.
    8 Jul · 7:57 PM

How It Developed

1 Jun · 8:22 AM
ECB VP de Guindos now emphasizes Spain's need for an Executive Board seat over a specific presidency candidate.
Econostream via PiQSuite
31 May · 1:18 PM
ECB Governing Council member Alvaro Santos Pereira stated the European Central Bank should act promptly due to high consumer-price pressures.
Bloomberg | Markets via PiQSuite
31 May · 11:19 AM
ECB's de Guindos suggests a June rate hike may not be followed by another, citing supply shocks impacting growth.
Econostream via PiQSuite
31 May · 11:09 AM
ECB's Pereira signals support for a June rate hike, linking policy to Middle East conflict duration.
Econostream via PiQSuite
30 May · 10:05 PM
ECB policymaker Pereira urged swift action on inflation to prevent a second-round impact, a view he reiterated.
PiQSuite

Sources

T1
ECB to Act Sooner Rather Than Later, Pereira Tells Negóciosm.piqsuite.com
T1
ECB to Act Sooner Rather Than Later, Pereira Tells Negóciosm.piqsuite.com
T1
ECB's Pereira Says Better to Act Earlier Than Later on Inflationm.piqsuite.com
T1
ECB's de Guindos Says Further Hike After June Would Be Even More Uncertainm.piqsuite.com
T1
ECB Insight: Spain's Board Claim Takes Precedence as de Cos Fades from Viewm.piqsuite.com
T1
ECB must act on inflation sooner rather than later, policymaker Pereira saysm.piqsuite.com

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