ECB Advised to Tread Carefully Amid Inflation Risks

Bank of Greece Governor Yannis Stournaras has urged caution from the European Central Bank in its pursuit of further interest rate hikes. Speaking in a Bloomberg TV interview, Stournaras emphasized that while it's encouraging that higher inflation hasn't yet triggered significant wage-related effects, vigilance is still necessary. He pointed to repeated supply shocks and strong demand driven by fiscal expansion as reasons for continued caution.

The ECB has raised borrowing costs twice since the outbreak of the global pandemic, and Stournaras' warning comes at a time when inflation risks are on the rise. Repeated supply shocks and strong demand have contributed to higher prices, and Stournaras cautioned that this trend could change if wage-related effects become more pronounced.

The ECB is weighing its next steps in response to these economic pressures, and Stournaras' comments highlight the complexity of their decision-making process. While some may argue for further rate hikes, Stournaras is urging caution and emphasizing the need for vigilance in monitoring inflation risks.