ECB’s Villeroy: Must Be Patient to Ensure We Hit Inflation Target

16 January 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Tuesday said that patience was necessary to assure price stability.

In an interview with Bloomberg TV on the margins of the Annual Meeting of the World Economic Forum in Davos, Switzerland, Villeroy, who heads the Banque de France, said that ‘obviously our monetary policy has achieved much already, but we should remain patient. If not, we could miss the target.’

He repeated what he had said earlier the same day during a panel discussion, namely that there would be ‘very probably a rate cut this year, but the question of the season is a premature one.’

‘We cannot be in a situation where we give a fixed calendar in advance’, he said. ‘This would be, by the way, the comeback of forward guidance and in a very uncertain way.’

For interest rates to be reduced, ‘we must have the inflation outlook anchored around 2%, I would add solidly and durably’, he said.

Compared to one year ago, there was now more confidence about the reduction in inflation, but it was ‘too early to cry victory’, he said.

He didn’t share the opinion that the final phase of the disinflationary process was especially challenging, he said, and therefore, ‘monetary policy shouldn’t be more rigid in this last kilometre’.