The possibility of inflation in the eurozone falling below the 2% target was pointed out by the governor of the Bank of Greece, Giannis Stournaras, in an interview he gave to Platow.de
As he specifically stated, “new signs of weak economic activity and a high level of uncertainty are very likely to push inflation lower than expected. This means there is a risk that inflation will fall below the 2% target in the medium term.”
Asked whether the European Central Bank will proceed with a new reduction in interest rates in September, Mr. Stournaras stated: “The decision will depend on the facts. As President Lagarde has emphasized, we are not just relying on isolated figures. We are taking into account all available information.”
He reiterated that he expects the ECB to proceed this year in two interest rate cutsprovided that the de-escalation of inflation continues as we expect. “We are on the right track. In addition, growth is weaker than expected, which also argues in favor of a rate cut.” he said characteristically.
He expressed his concerns about the developments on the recovery front, stating that if the new American administration carries out the threat of imposing tariffs, it is possible that there will be even greater fragmentation of the global economy and the pressures will intensify in the direction of stagflation, i.e. a combination of inflationary pressures and weak economic growth.
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