By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras said the central bank had achieved a "soft landing" before the latest Middle East shock, bringing inflation down from around 11% to below 2%.

The Bank of Greece governor made the comments in an interview with Greek public broadcaster ERT3 dated Thursday, according to a transcript released by the central bank.

"The European Central Bank achieved what we call a soft landing," Stournaras said. "Do not forget that inflation had jumped to 10.7%, 11% after the invasion of Ukraine."

He said inflation had subsequently been brought below 2% before the latest Middle East shock.

Stournaras also distinguished between current inflation and the broader cost-of-living problem facing Greek households, saying the latter reflected the relationship between prices and incomes rather than prices alone.

"Income, however, is not a monetary matter," he said. "It has to do with productivity, it has to do with growth, it has to do with the distribution of wealth."

"Central banks can give advice, but they are not responsible for the combination of prices and wages," he said.

Stournaras said income could not sustainably be increased independently of productivity, recalling that an imbalance between wage increases and productivity had contributed to Greece's problems before the 2009-2010 crisis.

Turning to technological change, Stournaras said the combination of artificial intelligence and quantum computing could produce a major increase in productivity, while warning that the effect on wages would depend on whether AI replaced workers or assisted them.

"If artificial intelligence replaces people to a very large extent, productivity will rise, GDP will rise, profits will rise, but it is not certain that wages will rise," he said.

"If artificial intelligence assists people, then we will all benefit," Stournaras said.

Governments and institutions therefore had a central role in steering technological development toward assisting rather than replacing people, he said.