BoG Gov. Stournaras: We may see end to rising interest rates this year

Bank of Greece (BoG) Gov. Yannis Stournaras on Monday evening again delved directly into the increasingly sensitive issue of rising interest rates in the eurozone, speaking at an Economist event in Athens.

“On the ECB governing council we’ve made it clear that we still have a great deal of ground to cover. Further tightening of monetary policy is needed. So, we’re called upon to consider at what level interest rates are appropriate, and how long this level should be maintained in order to tame inflation,” the influential Greek central banker said, while adding:

“We need to curb inflation while ensuring financial stability and in avoiding pushing the economy into recession …this view is reinforced by the fact that pervasive and heightened uncertainty continues in the international economic and financial environment.”

Referring to the duration of the current cycle of high interest rates, Stournaras said “recent shocks in the global economy, and especially the war in Ukraine, with its impact on energy and food prices, have contributed immensely higher inflation. When these negative effects ease, and provided that expectations for inflation remain stable, then interest rates will gradually decline, to the extent that this is in line with the attainment of our objective; when we achieve our inflation target, markets expect interest rates to be close to 2 percent. Based data to date, I believe we’re close to the end of the upward cycle in interest rates, although we have not yet reached the end. Unless something changes drastically, we’ll see the end of rate hikes, possibly in 2023.”