ECB's Stournaras: Rate hikes to level that spurs hard economic landing may not be needed

ATHENS, Feb 16 (Reuters) - The recent drop in euro zone inflation is fuelling optimism, Greek central bank chief Yannis Stournaras said on Thursday, suggesting that interest rates may not have to be raised to a level that pushes the bloc into recession.

Stournaras, considered a "dove" on the ECB's 26-member Governing Council, said that data points to easing inflation pressures and a modest expansion in economic activity. Euro zone inflation fell to 8.5% last month from a peak of 10.6% in October and ECB board member Fabio Panetta predicted on Thursday that it could be under 3% by the close of the year.

Such a rapid fall in price growth allows for greater optimism that disinflation is finally underway and also over "the possibility that further increases in the base rates of the ECB may not, finally, be required to a level that could trigger a harsh landing of the eurozone economy to tame inflation." The ECB has hiked rates by a combined 300 basis points to 2.5% since July and promised a 50 basis point increase in March.
(Reporting by Lefteris Papadimas, Renee Maltezou and Michele Kambas; Editing by Balazs Koranyi and Bernadette Baum)

Messaging: renee.maltezou.reuters.com@reuters.net))

Reuters

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