Giannis Stournaras, Governor of the Bank of Greece, discussed the recent ESCB monetary policy decisions during an interview with Bloomberg TV. He highlighted the implications of recent U.S. tariffs for Europe and the euro/dollar exchange rate, also emphasizing the significance of the recent partnership between Alpha Bank and UniCredit for the Greek and European banking systems.
On the topic of ECB interest rates, Stournaras stated, “We will consider further cuts if the economic situation worsens and inflation continues to decline.” He commented on recent Eurostat data indicating a CPI drop to 1.9% for May in the eurozone, calling it “expected” given the average forecast of 2%. He noted that we experienced a soft landing and, when asked about the potential for more rate cuts after eight reductions in the past year, he said, “It’s best to wait and see. We’re nearing the end, but not quite done yet. We still face tariffs and geopolitical tensions.”
He added that if the economy slows and inflation sustainably falls below 2%, rate cuts would be considered, but he doesn’t anticipate such a scenario. Stournaras mentioned previously discussing a pause in the cycle of rate cuts, hinting at a pause in July with a possible decision in September.
He stated that there are risks to growth and expectations that inflation will decrease. “We will assess each meeting going forward,” he explained.
Regarding the more “hawkish” comments from ECB President Christine Lagarde, he expressed that he was not surprised, noting that the distinction between “hawks” and “doves” has diminished. He believes that Mrs. Lagarde has not dismissed any possibilities; however, the future economic landscape remains uncertain. He also pointed out that the bond market is another area to monitor.
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