Guindos warns that the ECB's determination to combat fragmentation cannot be doubted

MADRID, 16 Jun. (EUROPA PRESS) -

The Vice President of the European Central Bank (ECB), Luis de Guindos, has affirmed that the markets should not have any doubts regarding the determination of the institution to face the fragmentation of the costs of financing the sovereign debt of the euro zone .

"Markets should be in no doubt about how determined we are to tackle fragmentation," Guindos said in an interview with Greek newspaper 'Ta Nea'.

The Governing Council of the ECB decided in an emergency meeting held this Wednesday to apply flexibility in the reinvestment of the maturities of its debt portfolio corresponding to the anti-pandemic program (PEPP) and to accelerate the design of "a new anti-fragmentation instrument" aimed at calming the tensions in the sovereign debt markets.

In this sense, the Spanish economist assures that the fragmentation, or the inadequate transmission of monetary policy, has always been a concern for the Governing Council of the ECB.

On the other hand, the Vice President of the ECB reiterates that the base scenario of the entity's macroeconomic forecasts indicates that there will be no recession, although the euro area will record low growth, although he recognizes that, in more extreme situations, including a severe interruption of energy supplies, growth would turn negative in 2023.

Likewise, he recalls that the ECB's projections suggest that the currently very high inflation "will only begin to gradually decline at the end of this year", remaining above the 2% target throughout the forecast horizon.

"Inflation is more persistent and widespread than we thought a few months ago, but it will continue to fall in 2023 and 2024," he says.