ECB’s Villeroy: After December, May Raise Rates in More Flexible, Possibly Less Rapid Manner

16 November 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Wednesday repeated his assertion that the ECB could potentially slow the pace of policy tightening after reaching a normalisation range in December.

At the French German Business Forum in Paris, Villeroy, who heads Banque de France, said that ‘we have removed a substantial part of our accommodative monetary policy, and are clearly approaching the "normalisation range", which can be estimated to be around 2% in the euro area. We should reach this level in December.’

‘Beyond this, I believe that we will probably continue to raise rates, but we may do so in a more flexible and possibly less rapid manner - “jumbo” rate hikes will not become a new habit’, he said. ‘A favourable condition to interrupt rate hikes would be clear signs of a turnaround in the core inflation trend.’

Villeroy said he would ‘reiterate here our forecast, our commitment and our capacity: together with the Governing Council, alongside [ECB President] Christine Lagarde, we are going to bring inflation down towards 2% within two or three years.’