ECB’s Stournaras: Next Policy Steps to Hinge on Forecasts; Data Indicate Inflation De-escalation
16 February 2023
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Thursday said that the next set of ECB staff macroeconomic forecasts would determine the further course of monetary policy, and that there were indications of an improved outlook on the inflation front.
In a speech at the Greek-German Chamber of Commerce in Athens, Stournaras, who heads the Bank of Greece, said the latest data were ‘pointing to a visible de-escalation in inflation and a slight strengthening of economic activity’.
This created room for ‘greater optimism, both in relation to the latest official Eurosystem forecasts in December, and for the possibility that increases in the key ECB interest rates to a level that would potentially cause a "hard" landing of the euro area economy in order to tame the inflation.’
What the ECB did next would depend primarily on inflation prospects as revealed by the updated forecasts to be released next month, he said.
‘Already the latest forecasts from the European Commission reflect improved inflation and economic growth data in the euro area’, he added.
Greek economic growth was projected to slow to about 1.5% this year after an estimated near 6% last year, but would then reaccelerate and expand at around 3% next year and the year after, he said.
Domestic HICP inflation would, after averaging 9.3% last year, slow to 5.8% and 3.6% this year and next, respectively, he said. However, core Greek inflation, 4.6% last year, would persist at that level in 2023, ‘driven by the incorporation of strong inflationary pressures from the non-energy industrial goods and services components’, he said.