ECB’s Stournaras: Still ‘Highly Restrictive’ With 25BP Cut in October and December

9 October 2024

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Yannis Stournaras said on Wednesday that monetary policy would remain ‘highly restrictive’ even if the ECB cuts interest rates by 25bp twice before year's end.

In an interview with the FT, Stournaras backed 25bp cuts in October and December.

‘Even if we have one cut of 25bp now and another one in December, we will be back to just 3% — still in highly restrictive territory’, he said.

There is still room for more cuts in 2025, he added.

‘Confidence indicators are just between life and death’, according to Stournaras, while ‘inflation is falling faster compared with our September forecast’.

The latest information points to getting to 2% ‘perhaps’ in Q1 2025, he said.

‘If inflation continues the downward path towards the 2% target, why not cut in every meeting?’, he suggested.

Only a small number of policymakers at the ECB do not agree with the majority’s opinion on the short-term interest rate path, according to Stournaras.

‘We all look at the same data, and it suggests that we’re heading to achieving the 2% in mid-2025 if not earlier’, he said.