ECB’s Villeroy: Once Inflation Returns to Around 2%, Interest Rates Can Decline Again

19 September 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Tuesday said that inflation would have to retreat to around 2% in order for interest rates to be able to fall again.

In an interview with French business news channel BFM Business, Villeroy, who heads the Banque de France, said that the current level of interest rates was ‘goo’, and that ‘barring any new developments, the most important thing now is to be patient, to be tenacious.’

‘We're at the right dosage... but you have to take the medicine long enough, and we're going to see this deceleration in inflation’, he said. ‘There are encouraging initial signs, but as the disease diminishes and one day disappears, that is returns to around 2%, then we'll be done with the remedy.... At that point, interest rates may fall again, but we're not there yet.’