Bank of Greece governor Yannis Stournaras sees inflation in the Eurozone peaking this year, predicting a further decline in 2023 before retreating to near the ECB’s 2% target next year. As he characteristically stated: “I am optimistic that the monster of inflation will have been defeated by the end of 2024″
Speaking at a conference at the Alpbach European Forum, the Greek central banker said that “I believe that the successive jumps in inflation to ever higher levels will soon begin to reverse. A steady de-escalation of inflation is imminent,” to add that “My belief is based, among other things, on the expected moderation in the rate of growth in energy and commodity prices, as well as the gradual easing of problems in supply chains.”
He also added that according to the latest Eurosystem experts’ projections (published in June), inflation is expected to peak before the end of the year, decline gradually in 2023 and converge to the target in 2024. Core inflation is expected to follow a similar course, while he pointed out that “The risks to the development of the euro zone and the global economy are constantly increasing. This may imply lower price pressures in the medium term.”
That’s why he added that under these conditions, monetary policy is faced with the dilemma of reducing inflation to the target level on the one hand and a “soft landing” on the other amid growing fears of an economic recession.
Beyond that, he noted that “We remain determined to destroy the Hydra of hyperinflation, without overlooking the risks to the transmission of our single monetary policy, financial stability and economic activity,” adding that “That is why we have developed an important new tool, TRI, which will enable us not only to tackle inflation aggressively but also to prevent any threats of fragmentation’ and concluded ‘I am optimistic that the monster of inflation will have been defeated by the end of 2024’.
