ECB’s Guindos sees inflation target hit sooner rather than later

The European Central Bank isn’t far from achieving its 2% inflation target, helped by a stronger euro and falling energy costs, according to Vice President Luis de Guindos.

Those two factors will give a “downward push” to the retreat in consumer prices in the 20-nation euro zone, the Spanish official told Bloomberg Television. While the overall impact of US tariffs on inflation remains uncertain, he said that he couldn’t rule it would “eventually” lead to slower price growth.

“The disinflationary process is ongoing,” Guindos said Wednesday. “Sooner than later we’ll be able to reach our definition of price stability on a sustainable basis.”

Officials are expected to cut interest rates again in June and may be open to further easing. Belgium’s Pierre Wunsch told Bloomberg Tuesday that “mildly supportive” policy may be needed to secure an economic recovery and ensure inflation doesn’t dip below 2%. He called market bets for a terminal rate of 1.75% in 2025 “reasonable.”

Euro-zone inflation held at 2.2% in April due to a surge in underlying prices, but analysts forecast a reversal in May — probably pushing inflation even below 2%.

The European Commission this week said that consumer prices are likely to rise by 2.1% this year and 1.7% in 2026.

Guindos also highlighted that officials in Brussels had downgraded their growth projections for 2025, adding that the ECB’s new round of quarterly forecasts in June will probably go “in the same direction.”

“In March, we said very clearly that the risks to growth were tilted to the downside,” Guindos said. “And now I can assure you that many of the risks that we identified in that moment of time have become a reality.”

Guindos spoke after the ECB presented its twice-yearly Financial Stability Review, in which it warned that heightened investor concern over the riskiness of US assets could further jolt the world’s financial system. But some European officials also see this moment as an opportunity to raise the international profile of their common currency.

“It’s going to be in our hands,” Guindos said. “If the European institutions apply and we’re able to put in place the correct policies in terms of capital markets union, in terms of banking union, in terms of the single market, for sure that the role of the euro in the global economy will be more and more relevant and we will gain market share.”

The ECB vice president is also the chair of a Governing Council task force that’s supposed to make proposals on how to simplify banking regulations that are deemed to have become too complex in recent years. He said the goal isn’t to lower banks’ capital requirements and jeopardize the stability of the industry.

“The measures that we are going to recommend are going to be capital neutral,” Guindos said. “We will try to simplify, but not to deregulate.”

©2025 Bloomberg L.P.