ECB’s Stournaras: May Start Reducing Interest Rates in 2023 if We Have a Recession
27 July 2022
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Wednesday suggested that rate cuts might not be in the too-distant future, were Europe to enter recession.
In an interview with Greece’s SKAI Radio, Stournaras, who heads the Bank of Greece, said that ‘winds of stagflation are blowing in the global economy’ and that the impact of Russia’s war of aggression had ‘been underestimated, especially in Europe’.
Were the war to stop, the situation would ‘start to improve dramatically’, he said, but ‘if Russia uses gas further as a weapon and cuts exports to zero, then I fear we will continue to have higher inflation and a big impact on economic growth.’
Interest rates wouldn’t go up much, he said.
‘Central banks will raise interest rates as inflation rises, at least until the end of 2023’, he said. ‘Then we will start reducing them. Possibly even earlier.’
‘If the world economy, and especially the European economy, goes into recession, starting in '23, don't be surprised if we start having central bank interest rate cuts starting in '23, not increases’, he added.