ECB’s Villeroy: I Guarantee We Will Do Whatever Is Necessary to Return Inflation to Around 2%

12 January 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Wednesday emphasised the determination of the ECB to do whatever proved necessary to restore price stability.

In an interview on French television news channel LCI, Villeroy, who heads Banque de France, said, ‘I am going to tell you something this morning very simple but I think very clear: I guarantee … that we - the European Central Bank, the Banque de France – we will do whatever is necessary so that inflation returns to around 2% over time. 2% is our objective.’

‘Regarding inflation, we are of course very attentive, because that’s very sensitive for the French’, he said. ‘There is an inflation hump. … [A] year ago inflation was at zero. At the time, inflation was even too weak in economic terms. In one year, we think that inflation in France will fall back to below 2%. And between the two, there is a hump. And the hump is essentially explained by energy prices. … We think that we are rather close to the peak of the hump.’

‘‘What’s true is that there is less inflation in France than in other European countries … but nonetheless, temporarily, there is too much inflation in France’, he said. ‘That’s why we are very vigilant and I tell you that I guarantee that we will do whatever is necessary.

‘What we see is that in spite of the Omicron wave, the French economy is globally resilient. … we are very resilient’, he said. The French are coping with the pandemic so as to be able to continue to produce, he said. ‘In January, globally, economic activity will be at the same level as in December. There will be no retreat, despite Omicron.’

This in effect also confirms the French central bank’s growth expectations for last year, he said. Growth ‘will be very high: 6.7%, the highest seen in 50 years’, he said. ‘And for 2022, our forecast is at 3.6%, that’s still a very good number.’

Still, uncertainty has increased most recently on account of the pandemic, he said: ‘And that we have seen during each of the preceding waves; this uncertainty has just increased with respect to December, but is less strong than during the containment … of Spring 2020 or Autumn 2020 or March and April 2021.’