ECB’s Stournaras: Euro Area Resilient, Inflation Near 2% but Risks Persist

26 September 2025

ECB’s Stournaras: Euro Area Resilient, Inflation Near 2% but Risks Persist
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 Friday said the euro area economy had shown “remarkable resilience” and that inflation was set to ease close to the ECB’s target, while warning that trade tensions and geopolitics were keeping risks tilted to the downside.

In a speech to the Federation of Industries of Greece in Athens, the Bank of Greece governor noted that ECB projections now see euro area growth at 1.2% in 2025, with inflation declining from 2.4% this year to 2.1% next year, helped by lower energy inflation and the euro’s appreciation. Easing by the ECB has “been instrumental in improving financial conditions,” he said.

Stournaras cautioned that uncertainty around US trade policy and broader geopolitical strains weighed on the outlook alongside structural European challenges such as weak productivity, competitiveness issues and demographics.

He called the July EU-US tariff accord a “difficult but necessary compromise” that should reduce uncertainty even as it “taxes European products at a relatively high rate." He observed that investors had been increasing allocations to European government and high-rated corporate bonds, an opening for Europe to strengthen the euro’s international role.

To seize that opportunity, Stournaras urged faster European integration, including completing Banking Union, building a functioning Capital Markets Union as part of a Savings and Investment Union, and removing barriers to intra-EU trade. He noted Europe saves about 2.5% of GDP more than it invests and cited additional annual investment needs of around €800 billion to close the gap with the US.

Turning to Greece, Stournaras said that growth remained above the euro area average and that headline inflation eased to 3.1% in August, with unit labor cost dynamics improving cost competitiveness. Robust fiscal performance and stronger banks were supporting investment, he said.