ECB’s Stournaras: Close to but Not Yet at the End of the Hiking Cycle

19 June 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Monday said that the ECB was close to but not yet at the end of the hiking cycle, which it could reach this year.

At an event of the Economist in Athens, Stournaras, who heads the Bank of Greece, said that that ECB had ‘made it clear that we still have a lot of ground to cover. Further tightening of monetary policy is needed.’

The next policy moves ‘should be gradual and measured’, he said. ‘We should not underestimate the risk that the effects of the monetary policy measures we have already taken will prove particularly severe when they are fully unwound.’

Monetary policy should bring inflation under control whilst also safeguarding financial stability and avoiding economic recession, he said.

‘In summary, based on the information to date, I believe we are close to the end of the upward cycle in interest rates, although we have not yet reached the end’, he said. ‘Unless something changes dramatically, possibly in 2023 we will see the end of the increases.’

Already weakening price pressures would soften more once the ECB’s previous steps had unfolded their full effect, he said, though he cautioned that with HICP forecast above 2% over the medium term, the ECB could not relax.

Future policy decisions will be driven by ‘our assessment of the outlook for inflation, based on incoming economic and financial data, the dynamics of core inflation and the intensity of our policy transmission’, he said.