By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau said on Tuesday that the tightening of financial conditions was already affecting inflation.

Villeroy, who heads the Banque de France, told Bloomberg TV that the ECB should not focus on data points, adding that the duration of the Middle East conflict appeared to be longer than expected, forcing the ECB to monitor more long-term, structural consequences.

“The data will matter more than a precise date, and this is focused on second-round effects,” he said.

 Asked about market expectations of at least two interest rate hikes in 2026, Villeroy said, “we are not market-driven, we are data-driven.” However, he added that financial conditions were now tighter and were already having an impact on inflation.

He said the recent bond market sell-off was not confined to Europe but was a “global phenomenon,” driven by uncertainty, questions over fiscal policy and concerns about inflation.

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