ECB’s Stournaras: Can Hardly See the Case for September Rate Hike

28 July 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Friday said that it was difficult to imagine that the ECB would hike rates in September.

In an interview with Greek financial news portal, Stournaras, who heads the Bank of Greece, said, ‘It looks like we are very close to the end of rate hikes. In any case, I think if there is one more — and I hardly see it — in September, I think we will stop there. But I also see September's 25bp as weak.’

Asked how long peak rates would be maintained, he replied, ‘A few months for sure.’

‘Everything will of course depend on the economy, on the dynamics of inflation in the first place, the dynamics of the economy in the second place and the problems if any in the financial sector’, he continued. ‘Because when you raise interest rates too much, yes, for a while the banks make profits, but on the other hand, with the reduction in demand for loans from households and businesses and the strain on the economy from the increase in interest rates, this may create a new generation of red loans.’