ECB’s Stournaras supports continuous rate cuts until neutral level reached

Greek ECB Governing Council member Yannis Stournaras expressed strong support for further monetary easing, suggesting a rate cut at every meeting moving forward until the policy rate reaches the “neutral rate,” estimated at around 2%.

Speaking with Bloomberg TV, Stournaras described the proposed quarter-point reduction in December, which would bring the deposit rate to 3%, as the “right response” to current economic and inflation conditions.

He refrained from ruling out a larger 50 basis-point cut, and emphasized that external factors, including market reactions and the Fed’s actions, remain uncertain.

Stournaras also downplayed concerns over the sharp third-quarter rise in negotiated wages, the highest since the euro’s inception in 1999, stating, “We expect that to fall in the months to come. We thought it’s one blip but not a permanent increase.”