Stournaras reserved on post-PEPP cheap liquidity from ECB

Central banker Yannis Stournaras appeared quite reserved on Thursday on the subject of Greece being able to keep obtaining cheap liquidity from the European Central Bank after the expiry of the extraordinary bond-buying program (PEPP).

He told state broadcaster ERT that “we will discuss that in December. I do now want to speak ahead of any decisions. I believe it will all be for the best.”

In the past the head of the Bank of Greece has expressed confidence that the ECB would keep buying Greek bonds even after the end of the PEPP, under certain conditions, and “ensure there will be no decimation.”

However, as the date of the discussion of the matter approaches, he does not want to make any forecasts, he said.

Notably, the option of PEPP bond reinvestment has recently surfaced, which raises question over whether that would suffice to avert any pressure on bonds.

Stournaras also said inflation in Greece will be around 3% in the last quarter of the year and the first of 2022, adding that figures today point to a deceleration in Q2 of next year.

He said the phenomenon is temporary and on average terms inflation will be close to 1% this year, around the 2% target next year and below that in 2023.

The central banker further called on commercial lenders to be very cautious in the expansion of their consumer credit.