The European Central Bank faces a classic central banking dilemma heading into its June meeting: inflation is running hot, but the economy is barely moving. ECB Vice President Luis de Guindos wants his colleagues to keep both facts in mind before reaching for the rate hike lever.
Guindos, in what amounts to one of his final public statements before leaving office, stressed that weaker growth in the euro area deserves serious weight when the Governing Council convenes on June 10-11.
The numbers telling two different stories
Euro area inflation surged to 3% in April 2026, a sharp jump from 1.9% just two months earlier in February. The euro area economy expanded by just 0.1% in the first quarter of 2026.
The ECB held its key interest rates steady at its last meeting on April 30. The deposit facility rate sits at 2.00%, the main refinancing rate at 2.15%, and the marginal lending facility at 2.40%. That decision reflected what the ECB characterized as intensified upside risks to inflation alongside downside risks to economic growth.
