Madrid, Sep 19 (EFE).- The Vice-President of the European Central Bank (ECB), Luis de Guindos, defended this Monday that the institution will seek a “balance” between the fight against inflation, which is “the greatest pain which the European population”, and avoid a recession in the euro zone.

During his speech at the annual meeting of the advisory boards of Banco Sabadell, De Guindos argued that inflation affects the whole of the European population, in particular the most vulnerable groups, and that for this reason the ECB has priority to fight it.

Therefore, since “the slowdown will not reduce inflation by itself”, the ECB will continue to raise interest rates, despite the fact that the tightening of monetary policy will affect the income available for consumption and investment, which in a downturn could lead to a recession you want to avoid.

It’s a “balancing game”, stressed De Guindos, who recalled that the ECB only foresees a recession in the euro zone in its worst-case scenario, if there is a complete cut in supply. in Russian gas.

He does not comment on the Spanish tax on banks

The deterioration of the economic situation will also affect the banking sector, warned De Guindos, because while it will initially benefit from the rise in interest rates, it will then have to face the increase in the cost of deposits and funding through the markets.

Two people withdraw money from ATMs in a bank in Madrid. EFE/Emilio Naranjo

In addition, the economic situation will affect the solvency of certain sectors of activity, which will in turn impact the financial sector.

With regard to economic policy, the Vice-President of the ECB believes that “the first thing to do is not to make mistakes”, which, in his view, requires a “selective” budgetary policy, centered on the most vulnerable.

De Guindos avoided commenting on the new bank tax in Spain, although he stressed that the ECB will issue a non-binding opinion on the matter despite it not being requested by the government.

In any event, the ECB’s approach to this type of tax “is clear”: it should not affect the cost of financing or granting credit or the solvency of the financial sector.

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