The meeting of the Board of Directors of the European Central Bank (ECB) continues today for the second day, at the Bank of Greece building in Athens, hosted by the Governor of the Central Bank, Giannis Stournaras.

The governors of the national Central Banks of the euro area countries and the six members of the Executive Committee of the ECB are meeting at the main building of the Bank of Greece to take decisions on monetary policy in the coming period.

After the end of the meeting, there will be a press conference during which the president of the European Central Bank, Christine Lagarde, the Vice-President of the ECB Luis de Guindos and the governor of the Bank of Greece Giannis Stournaras, will explain the decisions on the new monetary policy .

Lagarde’s interview with SKAI

Yesterday, Christine Lagarde spoke to SKAI about the price nightmare, the risk of new inflationary pressures due to the flare-up in the Middle East and the prospects of the Greek economy.

The interview in detail:

Co. Kosioni: The Governing Council of the ECB will meet tomorrow in Athens to decide on the next steps of the European monetary policy. But this is happening in a very heavy, volatile international environment due to the crisis in the Middle East. So I would like to ask you first, if you are concerned about a possible new energy crisis and a possible new round of inflationary pressures. Have you considered such a scenario at the ECB?

Christine Lagarde: Well, let me first express my thoughts and sorrow for the people who are losing their lives and being injured in these horrific developments that we are seeing in the Middle East. This is first and foremost. And then, of course, as central bankers, we have to consider the potential consequences of any conflict and turmoil around the world. We carefully examine the situation, monitor prices and futures contracts. We’re looking at the impact it could have on energy prices, which of course are an important part of our lives and which have been a key factor in the inflation we’ve had over the last three years. Well. So we are monitoring it.

Kosioni Co: Europeans and Greeks are also struggling with the combination of high interest rates and high prices. Do you think it’s time for European governments to do more to fight inflation? Do you think they have done enough? I mean, you have your own role, you “run” monetary policy. What should governments do?

Christine Lagarde: It’s an interesting question because for governments doing more probably means doing less. And that is what we central bankers have argued recently, that the fiscal stimulus and fiscal support that was given to citizens, to small and large businesses at the height of the crisis. Now energy prices have dropped. I am not suggesting that they have been reduced completely, but now that the crisis has subsided, it is time to withdraw these measures. And that will be the best way to help us tame inflation and bring it back to 2% in the medium term.

Kosioni Co: People wonder if prices will ever return to, shall we say, normal levels. Inflation will come down at some point. But what about the prices? Will they ever go back to normal levels? Christine Lagarde: It’s also a very good question. Price levels have risen and are likely to remain high. What we are trying to do is to bring inflation down to 2%, which means that price rises will be contained and stabilised. This is the mission of the ECB. Price stability. But you know that price levels have risen and will not return to pre-coronavirus levels, nor will wages in this era. Therefore, we are moving into a different period.

Kosioni Co: What about the prospects of the Greek economy? Madam President, we are back to investment grade after so many years, the first major deal after 17 years in the banking sector is just around the corner and I want to ask you if you see any risks going forward.

Christine Lagarde: The first thing I see about the Greek economy is some very, very positive signals and good numbers. When I look at the eurozone economic data and the corresponding Greek figures are above the eurozone average, except for unemployment, which is still a bit higher, although at the lowest level since 2009. So, in terms of investment grade, the proposal for the acquisition of a stake in one of the major Greek banks, these are really positive messages for the restoration of confidence in the Greek economy. Now, has the Greek economy completed all the necessary reforms to improve productivity, so as to unleash its growth potential? Probably not. There is still work to be done and there is always work to be done.

Kosioni Co: Looking back, how do you feel about the Greek crisis and if you could change anything in the “recipe” of the IMF and the EU? for Greece, what would that be?

Christine Lagarde: My best “recipe” would be for the euro zone, in addition to a monetary union, to be a fiscal union, a banking union and a capital markets union. I think that would fundamentally change, in a drastic way, the way the crisis developed and was dealt with. But we cannot rewrite history.

Kosioni Co: My last question is a bit personal. Is there a particular moment you remember from that period?

Christine Lagarde: Two moments I will never forget. One is an Easter Sunday that I spent in Washington, in my office at the IMF, together with the then finance minister of Greece. And for me, Easter is important. It’s a celebration. And being stuck at my desk for 11 hours talking was serious. It wasn’t the ideal way to spend Easter Sunday, but it had to be done. The second is probably the 13th of July 2015, the day before the Bastille Day in France, where we spent the whole day and most of the night with the leaders of the Eurozone and the Prime Minister of Greece looking for a way out, which had to it is Greece’s exit from the crisis, but with its stay in the euro zone.