ECB's Stournaras Advocates for Moderate Rate Hikes to Curb Inflation

ECB Governing Council member Yannis Stournaras stated that the European Central Bank (ECB) can implement small interest rate hikes to control inflation without harming the economy. According to Jin10, Stournaras mentioned that even if inflation remains significantly above target for a period, as long as it is temporary, future monetary policy tightening should be moderate. This approach aims to curb further inflation spread while minimizing economic impact. The duration and intensity of the energy crisis, along with its transmission to the real economy, will also influence the ECB's response. The ECB will continue to closely evaluate all available data and is prepared to set policy rates at levels consistent with maintaining price stability in the medium term. Stournaras, typically known for his dovish stance, emphasized that there is currently no strong evidence of second-round inflation effects. However, he warned that uncertainty is rising due to damage to energy infrastructure in the Gulf region, which could extend inflationary pressures in the medium term. Extended delivery times and rising input costs indicate increasing pressure on supply chains.