Luis de Guindos, ECB Vice-President, in an interview on May 7, 2026, discusses inflation risks, energy shocks, monetary policy decisions, and the importance of institutional unity within the ECB.
On May 7, 2026, Luis de Guindos, Vice-President of the European Central Bank (ECB), participated in an interview with the Financial Times. He discussed the differences between the current energy price shock and the 2021-2022 inflation surge, emphasizing that interest rates are now positive, and the ECB is in quantitative tightening mode.
De Guindos highlighted that the ECB was late to act in 2021-22 due to prolonged academic debates on inflation drivers, but current conditions warrant prudence. He stated that decisions on interest rate increases depend on upcoming data, the conflict in Iran, and inflation expectations.
The Vice-President noted that financial markets have responded calmly to geopolitical tensions, which is positive, and that second-round effects of energy prices on wages and inflation expectations remain stable so far. He emphasized the importance of the reopening of the Strait of Hormuz for future stability.
De Guindos also addressed internal ECB issues, stressing the importance of unity within the Governing Council to maintain trust and effective decision-making. He commented on the need for reforms in Germany’s banking sector and discussed the potential for cross-border banking consolidation in the euro area.
Regarding fiscal policy, he expressed concern about limited fiscal space, increased defense and energy spending, and the risk of rising yields and spreads leading to a potential debt crisis. He clarified that the ECB has never discussed activating the Transmission Protection Instrument.
On the German economy, he noted structural challenges and the need for reforms, including banking sector consolidation. He also commented on Spain’s economic growth, attributing it to reforms and migration-driven population growth, while highlighting issues in rental housing supply and productivity.
De Guindos concluded by emphasizing that central banks must stay connected to real-world economic conditions and avoid living in an ‘ivory tower,’ balancing models with sound judgment.
