Stournaras: Management of current crisis is tougher

The contiguous situation caused by the war successful the Middle East whitethorn beryllium tougher than that of the 2021-2022 period, when ostentation spiked successful Greece again, Bank of Greece Governor Yannis Stournaras said connected Monday.

Speaking astatine the Economist Romania Government Roundtable successful Bucharest, Stournaras said “the absorption of the existent incidental [of an ostentation spike] whitethorn beryllium to beryllium successful some respects harder, compared to that of the 2021-2022 incident.”

His appraisal was based connected the information that during the 2021-2022 ostentation incidental the economical agents had nary caller representation of precocious inflation. Their expectations were based connected decades of very debased – adjacent antagonistic – inflation. So they had nary crushed to expect that ostentation would emergence supra 10% – arsenic ended up happening.

This time, however, the representation of double-digit ostentation is fresh, so producers and wage earners are unlikely to respond arsenic slowly. Second, monetary argumentation successful 2021-2022 was considered the basal constituent of tying medium-term ostentation expectations for inflation, something that the precocious credibility of cardinal banks contributed to.

But present that the war successful Iran came astir close aft the post-pandemic inflationary disturbance, the penetration successful Ukraine and the turmoil caused by the June 2025 subject enactment against Iran, the economical agents, Stournaras said, mightiness not beryllium so willing to view cardinal banks arsenic ascendant players successful the game.

“If indications look that secondary effects oregon a alteration successful inflationary expectations are becoming firm, the European Central Bank indispensable respond rapidly to guarantee that inflationary unit will not beryllium acceptable successful the expectations,” helium said.