ECB’s head Christine Lagarde praises Greek economy’s return to pre-Covid levels

European Central Bank (ECB) President Christine Lagarde on Thursday praised the Greek economy’s return to pre-Covid levels.

In a news conference in Athens, after a meeting of EBC’s board at the historic building of the Bank of Greece, Lagarde explained the reasons behind today’s decision to keep interest rates unchanged, while she stressed: “The fact that we keep interest rates stable does not mean that we won’t raise them ever again”, adding that this would depend on the economic data prevailing.

Referring to the Greek economy and Greek state bonds in particular, the ECB’s president noted that these were now eligible to participate in ECB’s repurchase programmes – which have been frozen – with the exception of the PEP programme in which Greek bonds participated already. The board meeting did not discuss the future of the programme, she noted.

The ECB’s chief said the main reason behind today’s decision to put a pause on interest rates was increasing risks, acknowledging that economic activity in the Eurozone remained weak. In addition, she stressed that the unjustified war by Russia against Ukraine and the tragic conflict caused by the terrorist attacks on Israel were main sources of geopolitical risks. This could result in more uncertainty for enterprises and households in the future, and could further slow economic growth. 

Lagarde said the ECB acknowledged that because of the existing monetary policy, long-term interest rates have risen significantly, funding became more expensive for banks, and interest rates on corporate loans and housing loans rose again in August. However, she said that the widening spread between deposit and loan interest rates was a matter for national competition authorities to address.