ECB’s Stournaras: Staying Restrictive for Too Long Might Risk Euro Area Recovery

12 April 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Friday said that economic recovery in the euro area might be at risk if the ECB kept its restrictive monetary policy stance for too long.

During a panel at the Delphi Economic Forum IX in Greece, Stournaras, who heads the Bank of Greece, said, ‘[I]nterest rates have stayed at a very high level for a long period, so we are perhaps in an overly restrictive territory, which if is not corrected soon, might destroy the first seeds of recovery in Europe that we observed recently.’

Inflation was now very close to the 2% target, he said, adding, ‘We are not there yet, but we are approaching it.’

Asked what the key message of the last Governing Council decision was, he answered, ‘[T]ime has come for a reduction of interest rates, we should not worry about the Fed not doing the same because the economic cycle is different.’