ECB's Priority Remains Fighting Inflation 'Disease', Villeroy Says

17 March 2023

By Xavier D'Arcy – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau said on Friday that fighting inflation remained the ECB's priority despite recent uncertainty.

'The priority is the fight against inflation', Villeroy, who heads the Banque de France, told French business news channel BFM Business. 'We have a commitment to bring inflation back to 2% by the end of 2024 or 2025', he said. 'We will keep that promise.'

'We need to treat the disease, which is inflation', he said.

At Thursday's Governing Council meeting, he said, 'we evaluated the situation, we discussed a lot yesterday. We faced increased uncertainty due to banking problems in the United States and at Credit Suisse. But we finally decided to do what we had said we would do [and hike interest rates by 50bp].'

He described the hike as a sign of 'confidence in our anti-inflation strategy and confidence in the solidity of European and French banks.'

'At the same time as we sent this signal of confidence, we reinforced our adaptability for the future', he said.

'If I had to take a fairly simple image, we moved from automatic piloting to instrument piloting', he said, adding that 'now it will be open meeting by meeting, we will decide based on the data.'

He emphasised the need to take into account the ECB's series of rate hikes so far, saying that 'when making future decisions, we must always keep in mind the effects of past decisions.'