ECB’s Stournaras: Monetary Policy to Remain Tight in 2024

8 April 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – European Central Bank monetary policy will continue to be tight this year, ECB Governing Council member Yannis Stournaras said Monday.

In presenting the annual report for 2023 of the Bank of Greece, which he heads, Stournaras said, 'Monetary policy in 2024 will remain tight, keeping interest rates at sufficiently high levels for as long as necessary to bring inflation back to the medium-term target of 2%.'

Despite that and other factors that contributed to slower economic growth last year, 'the world economy seems to be heading for a soft landing, exhibiting high resilience to the recent crises, while the risk of stagflation has receded following decisive and timely interventions by monetary and fiscal authorities’, he said.

Policies needed to take a risk management approach, he urged, given the frequency of supply shocks.

Many central banks experienced reduced profitability last year due to higher interest rates, he observed.

'It should be stressed though that central banks are public institutions, with the specific mandate of ensuring price stability and financial stability, and are not profit-oriented', he said. 'The projected losses are expected to be temporary and to be soon recouped by future profits.'

In any case, he argued, temporarily operating at a loss was not inconsistent with central banks' responsibility to strive for price stability. It was their success in this regard that gave central banks credibility, he said.