The European Central Bank should take a break from the reduction of interest rate In order to give officials the opportunity to evaluate the recent vibrations, especially by trade, according to a member of the ECB’s Board of Directors and Governor of the Bank of Greece, Giannis Stournara.
“Now it’s best to wait and see,” said the head of the Greek Central Bank on Bloomberg television. “It’s almost finished, but with such uncertainty worldwide you can never say it is over,” said BoG Governor Mr. Stournaras. These comments reflect President Christine Lagarde on Thursday after reducing the ECB’s deposit rate for eighth time, at 2%. The move left policymakers “in a good position to navigate the uncertain conditions that will arise,” she said.
Officials are predicting a pause when they set the next policy in July, and some may even consider the campaign to be over, according to people who know the matter.
Mr Stournaras said another reduction in borrowing costs would need the economy of 20 eurozone countries to weaken beyond what is predicted today, stating inflation below his 2% target – a scenario that does not see.
“The bar for another interest rates is high, in July and then,” he said in a separate interview with Bloomberg in London. “It would take great surprises downwards to re -reduce – therefore, much weaker growth or much stronger deflation. But we keep all the options open, as uncertainty is high and there are many well -known and unknown unknown. “
Inflation fell more than expected in May to 1.9%. The new Views of the ECB published on Thursday predict prices increase by only 1.6% in 2026 before reaching 2% in 2027.
“I am not worried about an temporary undercover inflation and at the moment I do not see the risk of coming up with a very low inflation scenario as before the pandemic,” Stournaras said. “If there is a reversal of US tariff policy and a more careful fiscal policy in the US, the euro power can be reversed quickly.”
At the same time, the economy has proven to be resilient with a stronger than expected performance at the beginning of the year, which was revised even higher on Friday, in a quarterly 0.6%progress. However, it has not yet felt the full force of US duties. The ECB expects an extension of 0.9% this year and 1.1% next year.
“If the economy continues as we have predicted, I think we will stay at 2%,” Stournaras said. “If the economy is weakened, we can go below it. If the economy is strengthened, we can change course. “
He was in favor of a “smooth policy with a steady hand”, without reducing interest rates very quickly, so we need to increase them quickly later.
Mr Stournaras said the views between the Board of Directors are not far from each other, with this week’s decision almost unanimous.