Bank of Greece Governor Stournaras Urges ECB to Pause Rate Hikes
Stournaras says the ECB should wait for clearer data before acting, citing energy costs and fiscal shifts in the euro area.
Key points
- Stournaras says the ECB should avoid hasty decisions and wait for more data.
- An October rate hike is possible if inflation or energy costs surge unexpectedly.
- The official emphasized fiscal prudence and the importance of global monetary credibility.
Bank of Greece Governor Yannis Stournaras stated that the European Central Bank should avoid making rushed policy decisions. He emphasized that the institution needs more time to assess upcoming economic data before changing interest rates.
The official spoke during the Eurogroup meeting in Dublin on Monday. He noted that the euro area faces persistent supply-side shocks alongside strong demand driven by fiscal expansion and rapid investment in artificial intelligence.
October rate hike remains possible
Stournaras left the door open for a rate increase in October if September data show a fresh inflation surge. A sharp spike in energy costs could also push the economy toward the central bank’s adverse scenario.
Otherwise, he favored pausing until the next projection cycle. He argued that an economic slowdown could warrant a temporary halt to rate hikes while policymakers gather more information.
Energy prices and fiscal prudence
Energy prices remain a pivotal factor for the euro zone’s inflation outlook. Stournaras noted that a potential agreement in the Middle East could offer rapid relief to energy costs.
He also stressed the vital importance of fiscal prudence among member states. This stance comes amid widening sovereign bond spreads between France and Germany, though he sees no major market turmoil yet.
Global monetary credibility context
Stournaras welcomed the recent rate decision by the US Federal Reserve as positive for global monetary credibility. He highlighted the central role of the Fed and the US dollar in the current financial landscape.
The Bank of Greece chief’s comments reflect a cautious approach to monetary policy in the euro area. He warned that taking the current inflation outlook for granted would be a mistake for policymakers.
