Patsalides: ECB Interest Rates Are Where They Should Be

The Governor of the Central Bank of Cyprus (CBC), Christodoulos Patsalides, believes that European Central Bank (ECB) interest rates are where they should be. In an interview with Econostream, he stated that the current monetary policy is neutral to restrictive and emphasized the importance of pre-emptive action, especially during the ongoing energy crisis.

When asked about the ECB's decision to keep interest rates unchanged last week, Patsalides explained that there was no evidence supporting a rate hike. He noted that second-round effects are not evident, expectations are anchored, and inflation is currently in line with its expected path.

However, he warned that given the current energy price situation, inflation risks are on the upside, and the CBC needs to monitor developments closely. Patsalides highlighted that the value of being pre-emptive increases as the risk rises, especially as time passes without a resolution to the energy crisis.