ECB Rate Hike Shows Confidence We Are on Right Path and Banks Are Solid, Villeroy Says

20 March 2023

By Xavier D’Arcy – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau said on Monday that last week’s 50bp rate hike by the ECB was a sign that policymakers were confident in the solidity of the banking system and that the central bank’s path in the fight against inflation was the right one.

Villeroy, who heads the Banque de France, told French public radio channel France Inter that the ECB’s most recent rate hike ‘shows our confidence in both the strength of the French and European banks and in our anti-inflation strategy.’

The rate hike ‘has been rather well received’, he said.

‘French banks are very strong’, he said, adding that ‘there is no issue concerning French banks’.

Banks in France ‘are fundamentally sound and they are not affected by what happened in the United States on the one hand and in Switzerland on the other’, he said.

For future monetary policy decisions, the ECB would ‘move from automatic to a form of instrumental steering’, he said.

‘Inflation will remain too high’ he said, ‘but we remain determined to beat inflation.’