ECB's borrowing cost reductions to be gradual - Council member Stournaras

Investing.com -- European Central Bank (ECB) Governing Council member Yannis Stournaras has indicated that the bank's reductions in borrowing costs should be implemented gradually. Speaking to To Vima newspaper, the Greek central bank chief suggested that while larger cuts cannot be ruled out, these would only be considered if data suggested below-target inflation over the medium term.

The ECB has already decreased interest rates in four quarter-point steps, and it is expected to continue this trend into the next year. Many policymakers, including Stournaras, have expressed a preference for gradual moves, which markets typically interpret as 25 basis-point steps.

Stournaras, known to be among the more dovish members of the Governing Council, suggested that there is still significant room for further monetary policy easing, considering the medium-term inflation trend. However, he expressed concern over the growth rate of the euro-area economy.

The 20-member euro-area economy has likely grown just 0.7% this year, and the ECB projects that output will only increase by 1.1% in 2025. According to Stournaras, the euro-area economy is struggling to regain momentum. He pointed to elevated geopolitical risks and intensifying international trade pressures, especially due to recent developments in the US and other countries, as potential factors that could further undermine global economic growth. This, in turn, could push euro-zone inflation below target.

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Source: Investing.com