ECB’s Stournaras: If Core Persists High, This Could Change Expectations for Rate Path

18 October 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Friday said that a slower decline of core inflation could change expectations of the ECB’s rate path.

In an opinion piece written for Greek news portal Capital.gr, Stournaras, who heads the Bank of Greece, said that recent data showed ‘modest’ growth in the region this year, ‘only slightly improved’ versus 2023, with disinflation continuing.

Europe and the world faced ‘significant risks and uncertainties’ including ‘the impact of rising real interest rates, low productivity growth, geo-economic fragmentation, geopolitical and trade tensions and climate change’, he said.

Tensions in trade and geopolitics were likely to stoke inflation, he warned.

‘At the same time, any slower decline in core inflation, due to aggregate supply shocks or labour market tightness, could alter current expectations about the evolution of key interest rates and borrowing costs’, he said.