European Central Bank Governing Council member Yannis Stournaras has stated that the ECB must avoid adopting an overly restrictive approach to prevent placing additional burdens on economic activity and investment.
"If inflation significantly but temporarily exceeds the target, the response should be balanced," said Stournaras, who also serves as Governor of the Bank of Greece, while addressing lawmakers on Monday.
European policymakers had already discussed the possibility of raising interest rates at their previous meeting. Stournaras believes that what is currently needed is a "cautious adjustment of monetary policy towards a more restrictive stance, one that curbs the intensity of secondary effects without disproportionately impacting economic activity."
Last week, Stournaras noted that preserving the credibility of the European Central Bank is a strong argument in favor of a rate hike on June 11.
Economists and investors anticipate a move of 0.25 percentage points at that time, and several Governing Council members have also indicated that such a step may be unavoidable if the United States and Iran fail to reach a lasting peace agreement.
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