ECB’s Stournaras: It’s Not Forward Guidance, But We’ll Hit 2% by 4Q and Then Stop

25 February 2025

ECB’s Stournaras: It’s Not Forward Guidance, But We’ll Hit 2% by 4Q and Then Stop
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 David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Tuesday said that the ECB would hit the terminal rate of 2% by 4Q of this year.

In apparent contradiction with the convention of abstaining from forward guidance, Stournaras, who heads the Bank of Greece, declined to hide behind the extreme uncertainty that habitually constrains his colleagues.

‘Whatever we say now about 2026 is going to be very premature’, he was quoted by Politico as saying, but ‘given the information we currently have, I expect that interest rates will reach 2% by the autumn of this year and that this is likely to be the terminal rate.’

Stournaras may have been one of several Council members on Bundesbank President Joachim Nagel’s mind earlier in the day when the latter complained that ‘[t]here’s nothing to be gained from publicly speculating on where we might stand, in terms of our interest-rate policy, in the summer or at the end of the year.’

A discussion of any pause at the March 6 Governing Council meeting would be inappropriate, Stournaras indicated, with this not ‘the right moment’, being ‘too early’.

‘We are definitely still in restrictive territory’, he explained.

Stournaras invoked the continued weakness of the euro area economy and noted that inflation was expected to reach the ECB’s target this year.

‘If the situation continues like that, we should definitely bring interest rates down further’, he said according to Politico.