(Reuters) – European Central Bank Governing Council member Yannis Stournaras said governments must do their part in reining in consumer prices after borrowing costs reached a level that may well be their peak, Bloomberg News reported on Sunday.
“Monetary policy has done its part to fight inflation,” Stournaras told Bloomberg in an interview, adding that now it was up to fiscal policy to “take out some of the heat.”
“A more restrictive fiscal stance wouldn’t only be a welcome strategic complement to ECB policy but also help improve the credibility of public debt and loosen the nexus with banks,” the Greek central bank chief said.
Stournaras’ comments follow those from another ECB policymaker Francois Villeroy de Galhau, who on Friday told a financial conference that overly loose budget policies risk fueling inflation at a time when the ECB is fighting to bring it lower.
The ECB raised interest rates by 25 basis points for the 10th time in a row on Thursday to an all time high of 4% in a bid to counter stubborn inflation but signaled that it was likely done tightening policy.
(Reporting by Kanjyik Ghosh in Bengaluru; Editing by Tomasz Janowski)