ECB Governing Council member Yannis Stournaras emphasized caution against tightening monetary policy further today. He noted borrowing costs had already risen since the ECB’s last policy meeting as a result of higher bond yields. Furthermore, given that minimum reserves are not subject to remuneration, the total interest dispensed by the 20 Eurozone central banks to their respective commercial banks would see a decline.
He noted borrowing costs had already risen since the ECB’s last policy meeting as a result of higher bond yields. Furthermore, given that minimum reserves are not subject to remuneration, the total interest dispensed by the 20 Eurozone central banks to their respective commercial banks would see a decline.
Stournaras expressed skepticism regarding any immediate shift towards a tighter monetary stance. He articulated, “For the moment I see no reason why we should tighten monetary policy now because increasing the minimum requirements will imply monetary policy tightening.”
He also responded to suggestions from some counterparts on an early end to the ECB’s PEPP bond-buying initiative. Stournaras emphasized the importance of maintaining this tool, especially in the current context marked by significant geopolitical uncertainties.
He stated, “I see no value in bringing it (the end) forward especially now under the new uncertainty we have because of the events in Israel and Palestine.” Reiterating ECB’s need to retain its adaptability, he concluded, “So we need to keep our flexibility and act if necessary.”
