BoG Gov. Stournaras: No ‘fiscal space’ for parties’ pre-elex spending pledges

Influential Bank of Greece (BoG) Gov. Yannis Stournaras predicted rising interest rates in the eurozone this year, and until 2025, in fact, citing the ECB’s stated target of containing inflationary pressures.

In an interview given to the Athens financial daily “Imerissia”, which was published on Wednesday, Stournaras also directly referred to the ongoing campaign season in Greece, as a general election is scheduled for May 21.

Specifically, Stournaras, a former finance minister himself, said there’s no “fiscal space” in Greek state finances to allow for implementation of political parties’ pre-election spending pledges.

Asked about a coveted return of Greece debt to an investment grade rating, Stournaras said international ratings firms will await a new government’s policy statements.

Echoing previous comments, the Greek central banker said a cycle of rising interest rates rises is nearing its end, but not yet there.

“We can’t say how many (more interest rate) hikes will be made. This will depend on forecasts for inflation, economic growth and financial conditions. As things stand now, and if assuming nothing dramatic lies ahead, we can say that within 2023 interest rate hikes will cease,” Stournaras said.

Finally, he also again emphasized that Greece’s systemic banks are well capitalized, post good liquidity rates, are under strict supervision and endure strenuous and repeated stress tests.