The eurozone’s monetary policy will depend on the extent of disruptions in the energy sector

The eurozone’s monetary policy will depend on the scale and nature of energy supply disruptions caused by the war with Iran. This was stated by Yannis Stournaras, a member of the Governing Council of the European Central Bank (ECB) and Governor of the Bank of Greece, according to Reuters.

According to him, if the spike in energy prices proves to be temporary, the need to adjust monetary policy will be limited. On the other hand, tighter monetary policy can be expected if this pressure proves to be stronger and more prolonged, affecting medium-term inflation expectations and wage dynamics.

Stournaras gave a positive outlook for the banking sector, eKathimerini reports, citing strong results for 2025. However, he warned that the current geopolitical uncertainty could affect the cost of funding, the quality of the loan portfolio, and the dynamics of lending growth.

According to the ECB Governing Council member, the current international turmoil is both a threat and a wake-up call for Europe, and strengthening the eurozone’s resilience will require accelerated European integration and more effective coordination of common policies.

As a reminder, following its meeting on March 19, the ECB left its three key interest rates unchanged. The deposit facility rate remains at 2.00%, the main refinancing operations rate at 2.15%, and the marginal lending rate at 2.40%. According to the regulator’s new forecasts, headline inflation in the eurozone will average 2.6% in 2026, 2.0% in 2027, and 2.1% in 2028. Compared to the December estimates, the forecast for 2026 has been revised upward, primarily due to rising energy costs.