FRANKFURT (Reuters) – European Central Bank Vice President Luis de Guindos told a Portuguese newspaper that an economic slowdown in the euro zone – or possibly a recession – would not be enough to control inflation and the European Central Bank would have to keep raising interest rates.
“A slowing economy will not take care of inflation on its own,” de Guindos was quoted by Expresso as saying on Friday.
“The slowdown in the economy will reduce demand pressures, which will reduce inflation,” he added. “But, at the same time, we have to act from a monetary policy point of view to keep inflation expectations steady and avoid the effects of the second round.”
