ECB’s Stournaras: We’ll Do Whatever it Takes Not to Let Inflation Become Structural

8 April 2022

By David Barwick – FRANKFURT (Econostream) – The European Central Bank will do whatever is needed to prevent inflation from becoming entrenched, ECB Governing Council member Yannis Stournaras said Friday.

Speaking at a conference in Greece, Stournaras, who heads the Bank of Greece, said that monetary policy could put an end to current high inflation, but ‘then we’re going to kill the economy, too.’

'Definitely we will not let inflation expectations get out of hand’, he said. ‘We will not … let inflation to pass on the labour markets and in wage developments. So we’ll do whatever it takes, and I will stop here, because we are in the silence period, we’ll do whatever it takes not to let inflation, a temporary inflation becoming a structural and permanent one.’

The likelihood of getting into stagflation in Europe was currently ‘very small’, he said. That was also true of the US, despite the recent inversion of yield curves there, he said.

‘Sometimes evidence … from bonds markets is very volatile, it changes from one day to another’, he said. ‘It has changed already, by the way. So I, although there are negative effects on inflation – the inflation is going up – and on growth -it's going down - I don’t think that at the moment Europe is at the risk of having a recession.’