“The European Central Bank must cut interest rates twice before the August summer break and twice more before the end of the year, without the Fed’s influence”told Bloomberg Giannis Stournaras.

“We need to start cutting interest rates soon so our monetary policy doesn’t become too restrictive”said the head of the Bank of Greece to his interview in London.

“Two rate cuts before the summer break are appropriate and four moves over the course of the year seem reasonable. So far, I agree with the markets’ expectations.”

“We will have little new information before the April meetingespecially on wages in early 2024 – but we will have a lot more data before the June meeting,” Mr Stournaras said, echoing ECB President Christine Lagarde’s comments last week. “I think in order to reduce interest rates as early as April we should see the economy collapse and I don’t expect that.”

He argued that he doesn’t share the argument that the ECB can’t cut interest rates before the Fed does –“and almost all my colleagues agree with that”he stated.

“We are completely independent and the euro area is a large open economy with a flexible exchange rate,” said Stournaras. “We must do what is necessary for the eurozone economy – nothing else”he said, adding that “the case for lowering interest rates is much more convincing for the euro zone than for the US”.

Beyond 2024, the BoE governor expects the deposit rate, currently at a record high of 4%, “to gradually decline to 2% in late 2025 or early 2026.” He considers this to be a neutral level. “At the moment I don’t see interest rates falling below 2%, as was the case before the pandemic,” he said.

Mr. Stournaras pointed out that “Economic growth in the euro area is much weaker than expected and risks are to the downside, while inflation has eased significantly and risks are balanced.”

Regarding salary increases, he appeared reassuring, stating that real wages will reach their pre-pandemic level only in 2025.

“Wages still cover the gap, without being ahead of inflation. We should not exaggerate the risk of a wage-price spiral,” he said, adding that “All the more so as nominal wage growth moderates and profits absorb part of wage increases.”