Europe is in danger of missing the “train of growth” if the European Central Bank (ECB) doesn’t proceed in time with a cut in interest rates, Bank of Greece (BoG) Gov. Yannis Stournaras emphasized on Friday.
The Greek central banker, considered as among the “doves” on the ECB’s governing council, spoke at the 9th Delphi Economic Forum.
In his comments, he reiterated that interest rates have remained at high level for a large period of time, adding that “if we don’t rectify this restrictive policy, the Eurozone economy risks losing the first wave of recovery, which appears to have begun,” he said.
Stournaras, a former finance minister, said the ECB should not “tail” decisions by the FED, but should get ahead of America’s Federal Reserve System and differentiate its policy.
First off, the United States and the Eurozone are in different phases of the economic cycle. The European economy’s growth rate economy is close to 0%, while in the US it’s around 2% and it is fueled by a fiscal deficit that causes inflationary pressure. In any case, the causes of inflation in the Eurozone and the US differ from each other,” he said.
Nevertheless, he defended ECB policy to date to reduce inflation in the Eurozone, underlining that criticism has been unfair, as the rate’s decrease to 2.4% shows that measures have been effective.
