“It is encouraging and hopeful that, for now, there is no price-wage spiral away from the 2% target, nor a disengagement of medium-to-long-term inflation expectations from that target,” the central banker said.
The governor of the Bank of Greece pointed out the need to achieve the “national”, as he described it, goal of recovering the investment grade, Giannis Stournarasin his speech to the employees of TtE during the cutting of the New Year’s Pie.
Mr. Stournaras also made recommendations for “responsible bargaining behavior of the social partners” in order to avoid the “upward price-wage spiral” as it carries serious risks for inflation.
“An important share of participation in the battle against inflation also has the correct fiscal and energy policy carried out by governments, as well as the responsible bargaining behavior of the social partners, which should not turn an exogenous energy shock that has worsened the terms of trade of a large net energy importer, such as Europe, into an upward price-wage spiral that will return us to stagflation of the 70s and early 80s,” he said characteristically and continued:
“It is encouraging and hopeful that, for the time being, there is no price-wage spiral away from the 2% target, nor a disengagement of medium-term inflation expectations from this target. This gives us hope and courage to continue the anti-inflationary policy without interest rate hikes that would cause a deep recession. And we certainly do not stop hoping and seeking the final cessation of this ongoing uncertainty by the most effective means available: The end of this bloody war.
The central banks they naturally recognize that fiscal policy should assume a cost of supporting vulnerable citizens, with measures that will be targeted at them, will be temporary and not permanent in nature and will provide incentives for energy savings. In this context, under the current pre-election conditions, the Bank of Greece, in the latest monetary policy report, formulated the recommendation for the coordination and understanding of the political forces, in order to implement the basic commitments of the economic policy, mainly regarding the return to primary surpluses, such as to ensure the long-term sustainability of the public debt and to preserve the significant achievements of the Greek economy in the last decade, with the main objective, national I would call it, the upgrading of the Greek Government bonds to investment grade in the current year ».
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