New interest rate increases within 2023 were predicted by the governor of the Bank of Greece, Giannis Stournaras, estimating that they will remain at high levels until 2025, when the inflation target set by the ECB is expected to be reached.

In an interview he gave to the newspaper “Imerisia”, he warns that there is no fiscal space to implement the pre-election announcements of the parties.

For the investment level, he estimates that for the relevant decision the investment houses will take into account the programmatic statements of the new government. He added that it would be good to have a stable, long-term government that will quickly take the necessary decisions, so that we can get the investment grade. Decisions that she will include in her program statements.

In more detail, on the subject of interest rates, he said that we are close to their peak, however, as he said, we have not yet arrived. “We cannot yet say how many increases there will be. This will depend on inflation forecasts, economic growth and financial conditions. As things are developing today and, if nothing changes dramatically, we can say that in 2023 interest rate increases will end,” he said.

He estimated, however, that because we still have to cover significant ground until inflation deescalates to the levels that the ECB has set as a goal, interest rates will remain where they are today or even higher for a period which will not be short.

“As things are developing today, we predict that inflation in the Eurozone will decrease to 2% in 2025. Of course, it will also approach 2% in 2024 but will not reach the 2% target…” said Mr. Stournaras.

Regarding the Greek banks, he assured that they are currently well capitalized, have good liquidity ratios, are strictly supervised, and undergo frequent stress tests. He estimated that the possibility of something happening to the Greek banks is very small.

Regarding investment grade, he said that we are close to obtaining investment grade, however, as he predicted, investment houses will wait for political developments, “they will wait for the next government and judge whether they will give us investment grade, mainly from the programmatic statements of the next government “, he said characteristically.

He added that what the Greek economy needs is one stable long-term government, to be able to make the necessary decisions. And this not only to get the investment grade, but, above all, to maintain it and go above it.

Regarding the course of the economy, he said that “at the moment, when the economy is doing well, we need a confirmation of reliable economic policy in the coming years and we certainly need stability in the government. We need a long-term government and of course a decisive government, which will also take the necessary fiscal decisions, because we have not yet reached where we need to be”.

With reference to the parties’ pre-election announcements, he warned that there is no fiscal space in Greece to accommodate all these pre-election announcements. “Certainly, I understand that before the election many say things, which are not going to be implemented, because, if we correctly estimate what is said, we go far beyond any fiscal space” underlined the governor of the Bank of Greece.