Those who predict that euro area interest rates will rise are “probably in a hurry,” Greece’s central bank chief Yannis Stournaras said on Monday, projecting that inflation will fall below 2% next year.
Stournaras, an ECB Governing Council member, said that despite rising energy prices, the European Central Bank does not expect a significant rise in inflation in the medium term and those who closely monitor the situation do not propose “a knee-jerk reaction of monetary policy.”
“Those who see an increase in interest rates are probably in a hurry,” Stournaras said during a conference in Athens.
Euro zone inflation is expected to approach 4% by the end of the year, twice the ECB’s target rate, before dropping back below 2% over the course of next year.
A selloff in European bond markets gathered pace on Monday, with German debt yields rising to their highest since May while money markets moved to fully price in a European Central Bank rate hike by the end of 2022. [Reuters]