Don’t rock the boat, says Stournaras

Central banker Yannis Stournaras issued a fresh message to the government and the opposition to preserve fiscal stability ahead of the elections, so as not to jeopardize the country’s course back to investment grade, and another to the social partners to prevent the creation of an upward price-wage spiral. He also signaled to the European Central Bank that inflation has begun to decline and that there is no need for interest rate hikes that would cause a deep recession.

Speaking to Bank of Greece staff on Thursday, he said that, apart from the central bank, an important part in the battle to reduce inflation concerns “the proper fiscal and energy policy carried out by governments, as well as the responsible negotiation behavior of social partners, which should not turn an exogenous energy shock that has worsened the terms of trade of a major net energy importer like Europe into an upward price-wage spiral.”

“It is encouraging and hopeful,” he added, “that for now there is no wage-price spiral away from the 2% target. This encourages us to continue the anti-inflationary policy without interest rate hikes that would cause a deep recession.”