ECB’s Stournaras: 25BP Rate Cut Most Likely Scenario in December

29 November 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Friday said that a 25bp cut was the most probable outcome of the ECB’s next monetary policy meeting.

In an interview with Greece’s ERT News, Stournaras, who heads the Bank of Greece, said that all options were open for the 12 December Council meeting but that ‘the way things are going now and if inflation is as we predicted before, in September in our baseline forecast, I think the most likely scenario is … 25bp’.

The option of a 50bp cut would be at one ‘extreme’, while ‘[i]t would also be extreme to make no reduction at all’, which could be the case ‘[i]f, for example, November's inflation figures are very bad’, he said. ‘But we do not expect that.’

US President-elect Donald Trump’s pronouncements regarding tariffs constituted ‘a very negative scenario’, according to Stournaras, as the tariffs apparently envisioned would trigger retaliation.

‘So if we have evidence that such a package [of tariffs] leads to a recession in Europe, yes, it is very likely that we will have a more aggressive policy of cutting interest rates’, he said.

In such a case, the ECB's terminal rate ‘may even be a little lower’ than 2%, he said.