ECB's Stournaras Says Modest Rate Hikes Can Curb Inflation Without Economic Damage, May 16

According to Jin10, ECB Governing Council member Stournaras stated on May 16 that modest rate increases can suppress inflation without causing significant economic damage. He emphasized that if inflation temporarily exceeds target levels, the central bank should adopt a more gradual approach to tightening monetary policy, thereby limiting further inflation spread while minimizing impact on economic activity.

Stournaras warned that uncertainty is rising due to potential damage to energy infrastructure in the Gulf region, which could prolong inflation pressures in the medium term. He noted that extended delivery times and rising input costs indicate growing supply chain pressure, though currently there is no strong evidence of a second-round inflation effect. The ECB will continue assessing all available data and remain prepared to set policy rates at levels consistent with medium-term price stability.