ECB’s Stournaras: Time to Diverge from the Fed on Interest Rates

12 April 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Friday urged that the ECB not follow the US Federal Reserve regarding the timing of interest rate cuts.

In an interview with Bloomberg, Stournaras, who heads the Bank of Greece, said, ‘Now it’s time to diverge' from the Fed.

‘The situations in the euro area and the US are completely different. In the US, demand is much stronger — mostly stemming from a push coming from the budget. We don’t have that in Europe. And inflation in the euro area was mostly supply-side led — not demand-side led, not led by wages’, he elaborated.

The ECB could possibly cut interest rates four times in 2024, he said.

Waiting too long to cut interest rates would threaten the euro area’s economy, which was already weak, and risk having inflation below the 2%, he said.

‘We see the first seeds of a recovery in Europe — also in Germany’, he said. ‘We don’t want to kill these first seeds of recovery.’