ECB’s Villeroy: Must Keep “Maximum Optionality”, Inflation Risks Two-Sided but “Particularly” to Downside

19 December 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Friday said that the ECB should preserve “maximum optionality” in its policy stance, noting that while risks to inflation remain two-sided, they are “particularly” skewed to the downside.

In an interview with French daily Le Figaro, Villeroy, who heads the Banque de France, said the ECB could take some satisfaction from the fact that inflation had been at target for seven consecutive months, allowing it to consider its “mission accomplished.”

He cautioned, however, that the institution must maintain “a great deal of humility and maximum optionality” given the uncertainty surrounding the economic environment.

Villeroy said inflation risks were two-sided but emphasized the downside, adding that the ECB would “therefore be as agile as necessary” in its upcoming policy meetings.

He said vigilance and pragmatism should continue to guide monetary policy, which would need to adjust if the euro were to strengthen and Europe were to import disinflation.

“That said, the current level of the euro, at $1.17, is about exactly at its 25-year average,” he said.

Villeroy also pointed to the impact of Chinese imports on inflation and growth, noting that volumes had risen by 11% while prices had fallen by 9%. Europe, he said, should respond not with protectionism but with “weight training” — mobilizing higher savings, strengthening the single market, and making better use of European talent and its deep pool of companies.