Vice-President of the European Central Bank (ECB) Luis de Guindos dismissed talk of interest rate cuts by the European Central Bank in the Eurozone as “premature”, warning that hurdles over “the last mile” of bringing inflation back to rate-setters 2% target will be tough to overcome.

“This is, at the end of the day, a very delicate balance,” de Guindos said, speaking a few days before eurozone inflation data was released on Friday showing it had fallen more than economists expected to 4.3% in the year to September.

The surge in inflation has forced European Central Bank to raise its deposit rate an unprecedented 10 times in a row to an all-time high of 4%.

While price pressures are now at a two-year low, De Guindos told the Financial Times the recent surge in oil prices to a 10-month high would “make our task more difficult”.

“We are on our way towards 2%,” said de Guindos. “Thats clear. But we must monitor that very closely, as the last mile will not be easy… the elements that might torpedo the disinflation process are powerful.” Along with oil, rapid wage growth, a weaker euro and resilient demand for services could also keep inflation high.

“This is, at the end of the day, a very delicate balance,” de Guindos said.

Source: Qatar News Agency