ECB’s Stournaras: Should Cut Rates by 25BP Each Time to Reach 2% by Year End

22 January 2025

ECB’s Stournaras: Should Cut Rates by 25BP Each Time to Reach 2% by Year End
Yannis Stournaras, governor of the Bank of Greece, at the European Central Bank Forum on Central Banking in Sintra, Portugal on June 28, 2023. Photo by Sérgio Garcia/ ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Yannis Stournaras said on Wednesday that the ECB should cut interest rates in steps of 25bp to approach 2% by the end of 2025.

In an interview with Greek newspaper Naftemporiki, Stournaras, who heads the Bank of Greece, said that ‘[w]e’re called to proceed gradually of course due to the great uncertainty, with interest rate cuts that, in my personal assessment, should be at the level of 25bp each time.’

By regularly cutting rates in these small steps, the ECB would get closer to 2% by the end of this year from the current level of 3%, he said.

Inflation in the Eurozone was falling as expected and maybe even more, he said, while the economy was probably weaker than forecasted due to potential tariffs from Donald Trump's US presidential administration.

‘I believe the US government will think twice before implementing these announcements’, he said.

Europe’s first movement in this regard should be appointing a negotiator, i.e. the EU Commission, according to Stournaras.

‘As the ECB, we’re working on a series of scenarios regarding the impacts, but the key is for Europe’s leaders to consider how Europe should react’ to possible tariffs, he indicated.

 

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