ECB’s Stournaras: Rates Appropriate Unless Major Shock Leads to Significant Deviation from Target

28 December 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Sunday said that interest rates would remain appropriate as they now stand unless a major shock occurred.

Stournaras, who heads the Bank of Greece, told Greek daily To Vima that 2026 would be starting with “optimism regarding the course of inflation in the euro area,” given inflation seen converging towards price stability and a smooth landing of the economy.

“The latest data show that we are on the right track: forecasts confirm that inflation in the euro area is close to the 2% target over the medium term, while growth remains resilient despite high uncertainty,” he said.

The Governing Council would decide meeting-by-meeting on the basis of all available information, he said. “Unless the euro area economy is faced with a severe shock that would cause inflation to deviate significantly from our medium-term objective, the current monetary policy stance is appropriate,” he said.

Uncertainty remained high, he said, a circumstance compounded by a lack of economic dynamism. “At the same time, developments in the international macroeconomic and financial environment and in global trade policy maintain an environment of uncertainty for investment, production and consumption,” he said.

Moreover, he continued, only with time would it be clear what impact higher tariffs and trade rerouting would have.

A possible easing of geopolitical tensions could mitigate the uncertainty, he said. Higher investment in technology and productivity-enhancing reforms would stimulate growth and dampen price pressures, he said.

“At the same time, a stronger-than-expected boost in defense and infrastructure spending could boost both growth and inflation,” he added.