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ECB Unfazed by Euro Strength, Low Inflation Risk: de Guindos

The European Central Bank (ECB) remains at ease with the current strength of the euro and sees little threat from inflation dipping too low, according to Vice President Luis de Guindos. His comments underscore the ECB’s confidence in its policy stance despite ongoing market concerns over currency appreciation and inflation dynamics.

Euro Strength Not a Concern

Speaking at a recent event, de Guindos dismissed worries that the euro’s recent firmness would pose significant headwinds to the eurozone economy. He emphasized that exchange rate fluctuations are only one of many factors the ECB considers when shaping monetary policy.

“The current level of the euro is not a source of concern,” de Guindos stated, signaling that the ECB sees no immediate need to respond with policy adjustments. His comments come as the euro holds steady near multi-month highs against a broadly stable U.S. dollar, largely driven by improving European economic sentiment and narrowing interest rate differentials.

The euro’s strength is often scrutinized for its potential to weigh on export competitiveness and dampen inflation. However, de Guindos indicated that current levels remain within acceptable bounds and do not warrant alarm. US News

Inflation Outlook Stable

De Guindos also downplayed concerns that inflation could slide too low, reiterating that the ECB’s medium-term outlook remains aligned with its 2% target. He acknowledged that while inflation has eased from previous peaks, underlying pressures remain relatively balanced.

“There is no indication at this stage that inflation will fall below levels that would require additional stimulus,” he noted, suggesting that the central bank is likely to stay on its current course barring any major surprises.

His remarks reflect growing optimism within the ECB that its monetary policy calibration is proving effective, even as global uncertainties and geopolitical tensions continue to cloud the broader economic landscape. Reuters

Policy Path Remains Data-Dependent

As always, de Guindos reinforced that the ECB will remain guided by data and economic developments. With the eurozone showing signs of resilience and inflation expectations anchored, the central bank appears in no rush to shift gears.

For now, markets are likely to interpret the ECB’s tone as steady and composed—comfortable with both the euro’s valuation and the inflation outlook. Free Malaysia Today

 

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