Guindos sees the rate level as appropriate but warns that geopolitical tension is already affecting investment

The vice president of the European Central Bank (ECB), Luis de Guindos, considers that interest rates are at an appropriate level at the current 2% set for the deposit rate, the reference that sets the cost of financing for families and companies. However, the number ‘two’ of the entity has recognized that there is “enormous uncertainty” linked to geopolitical events that is already having an impact on companies’ investment decisions.

“In a complex geopolitical environment, business investment can be affected and is showing a very moderate evolution“, he said this Thursday in an informative meeting organized by Vocento. His words come in a context marked by the United States military intervention in Venezuela, the arrest of Nicolás Maduro and his wife, and in which concerns persist about the war in Ukraine or the situation in the Middle East.

Also in a framework in which the region’s economy has barely held on (it grew by 0.3% quarterly between July and September after growing by 0.1% in the previous quarter), but in which inflation closed the year at 2%, in line with the agency’s medium-term objective, despite the increase in trade taxes.

The former Minister of Economy in Mariano Rajoy’s government has also pointed out that households maintain their savings rate at a high level, despite the improvement in real income, “because they have doubts about the future and even about fiscal policy”. Precisely, the National Institute of Statistics (INE) confirmed that this rate fell in the third quarter to two-year lows and stood at 12% in seasonally adjusted terms, which in reality continues to be a high level in historical terms.

“Things are happening that would have been unthinkable just a few quarters ago,” said the vice president of the ECB, who also highlighted the fact that the service inflation -which especially worries the entity due to the possible second round effects- is slowing down in the Eurozone. “If circumstances change, our monetary policy will be adjusted,” he added.