ECB’s Villeroy: Present Level of Interest Rates Appropriate

12 October 2023

By Isabel Teles – MARRAKECH, Morocco (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Thursday said that the peak of core inflation in the euro area had passed and that current ECB rate levels were adequate.

Speaking on a panel during the 2023 Annual Meeting of the Institute of International Finance, Villeroy, who heads the Banque de France, said ‘the level of our ECB policy rate is at present appropriate’.

‘Perhaps I should say it this way’, he said. ‘I think that in the euro area, monetary patience is now more important than monetary activism.’

He drew attention to the need for balance in monetary policy decisions. ‘We should need to balance the risk of doing too little against the risk of doing too much.’

‘We have a primary goal, without any doubt, which is price stability’, he said. Avoiding recession was secondary, he said.

‘There can be no doubt about our determination to reach this [2% inflation] target’, he said. ‘It’s an absolute priority.’

‘We can have a secondary goal, which is not about the destination, which is about the path’, he said.

‘If we can follow a monetary path which can show a soft landing as the destination - soft landing meaning avoiding recession and keeping a positive growth - rather than a hard landing, it’s a much better route.’