According to Stournaras, what is the rationale for a modest ECB rate hike—and how does he justify that it would avoid harming economic activity?

Stournaras argues that a 'significant but temporary excess over the inflation target' warrants a 'measured adjustment of monetary policy in a more restrictive direction in the near future'—specifically, a modest rate hike—to 'limit the intensity of second-round effects, without disproportionately affecting economic activity.' He emphasizes that such a step would be precautionary and calibrated, aimed at containing inflation spillovers while preserving growth, and notes there is 'currently no strong evidence' of those second-round effects emerging yet.

What key factors does Stournaras say will shape the ECB’s policy response beyond inflation data?

Stournaras states that the 'duration and intensity of the energy shock, as well as the mechanisms through which it is transmitted to the real economy,' will determine the ECB’s response. He also highlights risks from damage to energy infrastructure in the Gulf—which could 'prolong inflationary pressures over the medium term'—and points to 'longer delivery times and rising input costs' as signs that 'supply chains are coming under increasing pressure.'

Modest ECB Rate Hike Would Limit Economic Pain, Stournaras Says

May 16, 2026

ECB Governing Council member Yannis Stournaras suggests a modest rate hike could curb inflation without damaging the economy, citing energy shocks and supply chain pressures as key factors.

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