European Central Bank vice president Luis de Guindos told lawmakers in Europe in Brussels on Monday that incoming data suggests that the eurozone economy has grown at a moderate speed in the first quarter of 2025, per Reuters.
Coming to the inflation of inflation, De Guindos said he hopes inflation will work around around the ECB's 2% target.
“Euro area exporters are now facing new obstacles, and tensions in financial markets and geopolitical uncertainty are likely to weigh in investment in business,” he added. “In this environment, consumers can be careful in the future and prevent spending.”
Market reaction
The EUR/USD remains in its sunset following these comments and trading marginally lower around 1.1350.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the Reserve Bank for Eurozone. The ECB sets interest rates and is in charge of the financial policy for the region. The main command of the ECB is to maintain price stability, which means maintaining inflation by around 2%. Its main tool for achieving it is by increasing or decreasing interest rates. Pretty high interest rates usually result in a stronger euro and vice versa. The ECB Governing Council is making financial policy decisions at meetings held eight times a year. The decisions were made by the leaders of Eurozone National Banks and six permanent members, including ECB president Christine Lagarde.
In extreme situations, the European Central Bank can create a policy tool called EASING volume. QE is the process by which the ECB prints the euro and uses them to buy properties – common government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker euro. QE is a final way when the decrease of interest rates is not likely to achieve the purpose of price stability. The ECB used it during the great financial crisis in 2009-11, in 2015 when inflation remained tough low, as well as during the covid pandemic.
The quantity of tightening (qt) is the reversal of QE. It is carried out after QE when an economic recovery is carried out and inflation begins to rise. While QE the European Central Bank (ECB) has bought government and corporate bonds from financial institutions to give them liquidity, in QT the ECB stops buying more bonds, and stops re -avoiding the principal that is exploring the bonds it holds. It is usually positive (or bullish) for the euro.
