ECB’s Villeroy: Inflation Data Confirm Monetary Policy's Effectiveness

17 November 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Friday said the current inflation figures in Europe and in France showed that the ECB’s monetary policy decisions had been appropriate.

In a speech at a conference of the Prudential Supervision and Resolution Authority in Paris, a text of which was published to the website of the Banque de France, which he heads, Villeroy said that the fall in euro area inflation from 10.6%  in October 2022 to 2.9% one year later ‘proves the effectiveness of monetary policy and fully justifies the decision taken by the Governing Council on 26 October to put an end to the series of interest rate hikes.’

‘Our monetary policy must now be guided by confidence and patience: confidence that we are making steady progress in bringing inflation down towards 2% by 2025; and patience that interest rates will remain stable at their current level for the time still needed to pass them on in full’, he said.

Both banks and insurers could benefit from a rise in interest rates, he said: ‘Despite the economic slowdown, banks' cost of risk has not increased significantly, and has even remained at a moderate level.’