Luis de Guindos, Vice-President of the European Central Bank, said that the ECB is observing a very clear disinflationary process, which is reflected in both headline and core inflation indicators.
"The main risk is a combination of high wage growth, which currently hovers around 5%, and very low productivity. These two factors combined can lead to a significant increase in unit labor costs. And this is a risk, especially for inflation in the service sector. And that's why we need to wait. Wage dynamics are key, and most wage agreements will be concluded in the first months of this year. We will have more information in June," he said, adding that "the ECB does not depend on the date, but is guided by data."
"We predict that in 12-18 months, inflation will fluctuate around the 2% target, but we do not see a risk of falling below this level. We need to see a steady, continuous approach of inflation to 2%," de Guindos said.
"We are acting independently. The Federal Reserve system, of course, is the central bank of the world's largest economy, and we are watching what is happening in the US economy. But we depend on data, not the Fed. We do not target the exchange rate. The change in the exchange rate is influenced by several factors, including differences in economic performance, inflation dynamics and decisions made by monetary authorities. We are constantly monitoring developments, and I am quite sure that the Fed is also monitoring what is happening in Europe and the decisions we are making. Central banks often communicate with each other, but in terms of the decisions we make, we are completely independent," he added.