Early end to rate hikes is possible

Bank of Greece Governor Yannis Stournaras last week became the first member of the European Central Bank’s Governing Council to acknowledge that the recession may end the rate hike cycle.

The energy crisis complicates matters for the ECB, which has just begun aggressive rate hikes to tame the galloping inflation. 

“Central banks will raise interest rates as inflation rises, by the end of 2023. Then we will start to cut them. Possibly even earlier. If the world economy, and especially the European one, goes into recession, from 2023, don’t be surprised if we start having interest rate reductions from 2023, not hikes,” Stournaras noted.

Analysts and economists tell Kathimerini that although July’s inflation data point to another aggressive interest rate hike in September, the tightening cycle may stop even at the end of 2022.