MADRID (Reuters) – European Central Bank Vice President Luis de Guindos said on Monday inflation in the euro zone was widening and growth weakening as the bloc grappled with the fallout from Russia’s war in Ukraine.
“We are seeing a significant slowdown in the third and fourth quarters and we may find ourselves with growth rates close to zero,” de Guindos said at a conference.
Inflation is expected to have accelerated to 9.6% this month, a record high for the 19-nation currency bloc, while core price growth, which filters volatile food and fuel prices, is also expected to accelerate.
To combat rising borrowing costs, the European Central Bank earlier this month raised interest rates by an unprecedented 75 basis points after just weeks of moving 50 basis points and promised several more steps over the coming months as euro zone inflation hit its highest rate in nearly from half a year. century and in danger of becoming entrenched.
Investors are currently split between 50 and 75 basis points for an October rate hike, with subsequent increases seen at each meeting until next spring.
De Guindos gave no idea how large any next rate hike would look, but added that future moves would be “data dependent,” saying inflation pressures have increased recently.