BoG Gov. Stournaras on latest ECB rate hike: Decision based on inflation; Swiss, US banking sector unrest

Bank of Greece (BoG) Gov. Yannis Stournaras referred to two “parameters” as deciding Thursday’s decision by the European Central Bank’s (ECB) governing council to raise interest rates by 50 basis points, namely, inflation and the latest interventions by the Swiss federal government and US administration to minimize the threat of transmitting specific banks’ ills to the wider banking sector.

Stournaras, a member of the ECB’s governing council and a purported “dove” among the Euro-zone central bankers, said that although the inflation rate in the common euro area is easing, it remains high and significantly above the goal of 2 percent annually.

He said monetary police must remain devoted to the goal of containing inflation at low levels, while adding “we’re in a very uncertain world due to the war in Ukraine.”

Stournaras, an influential figure in Greece and a former finance minister, said the unrest in the US and Swiss banking sectors over the past week mean that monetary policy from now on must proceed with careful steps, “without beforehand commitments for interest rate hikes, but with decisions that will be taken in meetings by the governing council on the basis of data presented at the time.”