ECB’s Villeroy Backs December Rate Hike of 50BP
4 December 2022
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Sunday suggested that he would favour a December rate hike by the ECB of 50bp.
In an interview with French television news channel La Chaîne Info, Villeroy, who heads Banque de France, said that he believed the Council’s December monetary policy meeting ‘is going to mark the end of the first half, which is a half that was conducted at a very rapid pace of rate hikes’.
‘Personally … the rates are at 1.5% today, I think that it is desirable to bring them to 2%, so an increase of 0.5, of 50 basis points, because this 2% rate marks the end of one half or of a normalisation game.’
In another interview with German television channel Phoenix at which he was joined by Bundesbank President Joachim Nagel, Villeroy, asked how long the hiking cycle would continue, replied that he ‘would just say as long as it takes.’
‘We will bring inflation back to 2%, no doubt’, he continued. ‘And we will decide that from meeting to meeting. We had better news on inflation at 10% in the euro area in November, so lower than October, 10.6%. But that remains much too high.’
Euro area HICP would probably peak in the first part of next year, he said. The ECB would restore price stability ‘by the end of ‘24 or ‘25’, he said. ‘And that is not just a forecast, a prediction, that is a commitment.’