The present crisis caused by the war in the Middle East may be tougher than that of the 2021-2022 period, when inflation spiked in Greece again, Bank of Greece Governor Yannis Stournaras said on Monday.

Speaking at the Economist Romania Government Roundtable in Bucharest, Stournaras said “the management of the current incident [of an inflation spike] may prove to be in some respects harder, compared to that of the 2021-2022 incident.”

His assessment was based on the fact that during the 2021-2022 inflation incident the economic agents had no recent memory of high inflation. Their expectations were based on decades of very low – even negative – inflation. So they had no reason to expect that inflation would rise above 10% – as ended up happening.

This time, however, the memory of double-digit inflation is fresh, so producers and wage earners are unlikely to react as slowly. Second, monetary policy in 2021-2022 was considered the basic point of tying medium-term inflation expectations for inflation, something that the high credibility of central banks contributed to.

But now that the war in Iran came almost right after the post-pandemic inflationary disturbance, the invasion in Ukraine and the turmoil caused by the June 2025 military action against Iran, the economic agents, Stournaras said, might not be so willing to view central banks as dominant players in the game.

“If indications emerge that secondary effects or a change in inflationary expectations are becoming firm, the European Central Bank must respond quickly to ensure that inflationary pressure will not be set in the expectations,” he said.

Source: Ekathimerini.com