ECB’s Stournaras: ‘Need to Start Cutting Rates Soon’

14 March 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Thursday urged that the ECB start cutting interest rates.

In an interview with Bloomberg, Stournaras, who heads the Bank of Greece, said, ‘We need to start cutting rates soon so that our monetary policy does not become too restrictive. It is appropriate to do two rate cuts before the summer break, and four moves throughout the year seem reasonable. Insofar, I concur with the markets’ expectations.’

An April rate cut was unlikely, he indicated, as the ECB would not have much new information going into that meeting, whereas it would going into the June meeting. ‘I think to cut rates already in April we will need to see the economy crashing and I don’t expect that’, he was quoted as saying.

Stournaras deemed euro area growth ‘much weaker than expected’, with risks pointing downward.

‘I don’t buy at all the argument that we can’t cut interest rates before the Fed does so — and almost all of my colleagues agree with that’, he said. ‘The case for rate cuts is much more conclusive for the euro area than for the US.’

The deposit facility rate would ‘gradually go down to 2% at the end of 2025 or the beginning of 2026’, he predicted. ‘For the moment I don’t see rates go below 2% as it was the case before the pandemic.’