The view that there will be two more interest rates this year and that 2% will be their final level by the Governor of the Bank of Greece (BoG), Yiannis Stournaras, in the interview he gave to the Economostream and David Barwick.

Concerning the ECB’s decision at its next meeting in April, the BoG commander noted that at present everything is showing a reduction in interest rates, but given high uncertainty that it is impossible to know what can happen.

“If the meeting was today, I would be more confident that we would decide on, because inflation in February was 2.3%, according to the course we have drawn, and whether our prediction will also depend on the further reduction of interest rates. Also, figures for the fourth quarter of 2024 show a slowdown in wage growth. Inflation of services is divergent. The core of inflation has also been reduced. Everything is in the direction of a reduction in April. But we don’t have April yet, we are in March. We have a month ahead of us, so I can’t tell you that we will decide a reduction. And uncertainty is so high that it is impossible to know what can happen to change our decision, “he said.

Asked about his estimation that there will be two more reductions this year, G. Stournas noted: “This is of course not an official commitment. It is my assessment of how monetary policy will move, based on the current data and current forecasts available. I still believe we will have two more reductions this year and that 2% will be the end rate level of interest rates. I can’t tell you exactly when these two reductions will be made. In conditions so high uncertainty, it would not be prudent to be so accurate. “

The Governor of the BoG However, it excluded interest rates to reduce below 2%. As he noted, “it is very extreme, in my humble view. Prior to the European Commission’s decision and the decision on German debt brake, and with a duty war coming from the other side of the Atlantic, there may have been several evidence of growth weakening so that the interest rate would reach not 1.5%, but perhaps at 1.75%. Now things are different, although uncertainty remains high and we still have a long way to achieve faster growth in Europe without inflation – I am referring to the Capital Market Union, the relaxation of the regulatory framework, the competitiveness pact, the banking union, etc. “

Asked about the trade war, the BoG commander noted: “If the US imposes 25%duties, we know that this will mostly affect growth. There will be no winners, but – unfortunately – only losers. Among the losers will be the US itselfnot just the rest of the world. But there will be a decrease in demand for exports, and the euro area is a much more open economy than the US, so the impact on the growth of the euro area will be serious. Whether we have updated views or not, we can always judge, and we will discuss it. Of course, at the moment our executives are studying the subject intensively, so we will have some picture. “

Concerning Germany’s decision on debt brake And when will he begin to have visible consequences for inflation and growth, G. Stournaras stressed that it would take time. “The decision was made in Germany in principle and this is very good, because the country has a very low public debt and a small deficit. It is needed investment, so it is good to explore its fiscal space. By extension, it is a positive development for Europe, and the fact that there is a negative productive gap means that inflation will not be significantly affected. “