European Central Bank Governing Council Member: If inflation exceeds the target, more restrictive monetary policy measures must be adopted

European Central Bank Governing Council Member Yannis Stournaras stated during a hearing in the Greek Parliament that if inflation in the euro area temporarily but significantly exceeds the ECB's target, monetary policy should be cautiously adjusted toward a more restrictive stance.

Stournaras pointed out that the ongoing conflict in Iran and the blockade of the Strait of Hormuz have led to soaring oil and natural gas prices, which could have secondary effects on wages, as well as the prices of goods and services.

He said that if inflation is significantly but temporarily above the target level, policy responses should remain balanced; that is, monetary policy should be cautiously adjusted toward a more restrictive direction to curb the strength of second-round effects while avoiding excessive harm to economic activity.

He added that it is necessary to ensure inflation returns to the ECB's medium-term target of 2%, while also avoiding burdens on economic activity and investment caused by overly restrictive monetary policy.