Santander CEO Predicts ECB Interest Rate Peak at 3% Amid Inflation Concerns

The CEO of Banco Santander, Héctor Grisi, has expressed his concerns about the market's reaction to potential interest rate hikes by the European Central Bank (ECB). According to Grisi, investors are 'overreacting' and he believes that the official price of money will peak at 3% by the end of this year. This would mean a return to levels not seen since December 2024.

Grisi suggested that two interest rate hikes would be sufficient to maintain and slightly restrict inflation, keeping rates around 2.75 or 3% by the end of the year. However, he noted that further increases could be necessary in mid-2027, depending on how economic situations develop.

The executive also highlighted the need for monetary authorities to tackle high inflation, which has risen 4.3% year-on-year in Spain and between 3.5% and 4% in the European Union as a whole. Grisi emphasized that this level of inflation is too high compared to neutral rates, which are around 2.25% or 2.5%. He argued that tightening monetary policy would help reduce inflation.

Grisi also discussed his bank's recent acquisitions in the United Kingdom and the United States, stating that they are 'exactly pieces' needed to strengthen and improve its position in those markets. However, he emphasized that the entity will take a breather on acquisitions for at least the next two years to focus on integrating the newly acquired businesses.

The CEO also expressed his concerns about the growth gap between Europe and the United States, urging regulatory simplification to boost economic growth in the eurozone. He argued that more agile regulation would enable European banks to compete with their US counterparts and channel savings towards productive investments.