Yannis Stournaras, a European Central Bank Governing Council member, warned that the ECB must avoid an excessively restrictive monetary policy that risks choking off economic activity and investment. His comments signal concern that aggressive rate hikes could push Europe deeper into stagnation, putting pressure on companies already struggling with high borrowing costs.

The ECB has been raising rates to combat inflation, but Stournaras flagged that the central bank's credibility depends on balancing price stability against growth. If policy becomes too restrictive, businesses face steeper financing costs and consumers tighten spending, creating a negative feedback loop that weakens the broader economy.

Markets watching for signs of a rate-cutting cycle are likely to take note. Stournaras's remarks suggest at least some policymakers see the current restrictive stance as having gone too far, which could shape expectations for upcoming meetings and influence bond yields across European markets.