In an interview with Bloomberg TV, Bank of Greece (BoG) Governor Yannis Stournaras did not rule out the possibility of a mild recession once President-elect Donald Trump implements his campaign promises to impose tariffs.
The head of Greece’s central bank warned that Europe would have no choice but to respond with similar measures. Highlighting the ECB’s fears over market volatility and public debt levels, Stournaras pointed out that trade barriers should be avoided.
In the interview, Stournaras said he was in favor of a 25-basis-point cut in interest rates at the European Central Bank’s (ECB) December meeting, adding that he would continue to back rate cuts until reaching the 2% neutral rate target.
Stournaras emphasized it was premature to discuss whether the ECB should adopt a more expansionary monetary policy, which would mean rates dropping below the neutral level.
The Bank of Greece Governor defended the independence of central banks amid criticism from U.S. President-elect Donald Trump, who had publicly commented on Federal Reserve Chair Jerome Powell. Calling Powell an “excellent central banker,” Stournaras argued that safeguarding central bank independence is more critical than the tariff issue.
While he doubted that the new U.S. administration would alter the Federal Reserve’s charter, Stournaras warned that such a move could have significant global consequences, particularly impacting worldwide bond markets and financial stability.
