ECB’s Stournaras Rejects Idea of Initial Rate Hike Around Mid-2023 as Incompatible with Guidance
7 October 2021
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Thursday dismissed the idea that the ECB would start hiking interest rates around the middle of 2023.
In an interview with Bloomberg, Stournaras, who heads the Bank of Greece, said that ‘these expectations are not in accordance to our new forward guidance’.
The ECB is not in the same position as the US Federal Reserve or the Bank of England, he said. ‘The inflation forecasts are lower for the Eurozone than in the United States and in the UK’, he said. ‘So it’s natural that we are in a different phase of monetary policy.’
Asked whether he expected the rest of the Governing Council to support Greece’s desire to see its debt included in ECB asset purchases after the pandemic emergency purchase programme (PEPP) expires, Stournaras said that his ‘strong belief is that the Governing Council will prevent any kind of fragmentation of the transmission of monetary policy in any jurisdiction.’
‘It’s true that Greece does not have investment grade yet’, he continued. ‘But I’m sure that if we didn’t have the pandemic, investment grade in Greece would have been restored now.’
Greece had nevertheless made ‘very substantial progress in every respect’, he said, noting domestic growth this year would come in around 7% and 5% next.
‘The fiscal situation is under control despite the pandemic measures’, he argued, while the banking system had improved ‘tremendously’.
‘So I don’t see any reason why the Greek economy should be excluded from any kind of programme’, he added.