European Central Bank Vice President Luis de Guindos stated that caution should be exercised when considering interest rate hikes, as the full impact of the Iran conflict on economic expansion has not yet materialized. In an interview published Monday, Guindos noted that energy shocks typically manifest more quickly in inflation indicators than in economic growth metrics, adding that he expects upcoming economic activity data to be "not good." "So I call for caution: in the coming weeks, the impact on economic growth will become more evident," said the Spanish official, whose term ends this month. "Moreover, we need clearer conclusions regarding this conflict." When asked about the June meeting, Guindos said he never attempts to preempt interest rate decisions and reiterated that the reopening of the Strait of Hormuz is "very important." "Let's see the data in the coming weeks, examine the forecasts, and observe the direction of the conflict," he said. "Even if we have a ceasefire or peace agreement soon, the conflict will leave its mark because some infrastructure has been destroyed." While he described wage developments as "stable" and inflation expectations as "not concerning so far," he also pointed to consumer confidence as another issue of concern.
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