ECB Confident of ‘Some Kind of Soft Landing Which Is Not Immaculate’, Villeroy Says
28 June 2023
By Xavier D’Arcy – FRANKFURT (Econostream) – The European Central Bank is confident of achieving a soft landing, though the return to price stability will not be without pain, Governing Council member François Villeroy de Galhau said on Wednesday.
Speaking at an economics conference in Paris, Villeroy, who heads the Banque de France, said that ‘we are probably more confident of some kind of soft landing which is not immaculate, which is not without pain.’
‘We will have a significant slowdown, but in our view not a recession, so disinflation without recession’, he said.
The period of time for which rates would remain restrictive was more important than the level of the ECB’s terminal rate, he said: ‘I think that due to the monetary-transmission lag, length is more important than level.’
‘We are close to the former (levels) but so should be sufficiently patient on the latter (duration),’ he added.