The European Central Bank has brought interest rates to an appropriate level and should now be patient rather than acting further to fight inflation, according to Governing Council member Francois Villeroy de Galhau.
(Bloomberg) — The European Central Bank has brought interest rates to an appropriate level and should now be patient rather than acting further to fight inflation, according to Governing Council member Francois Villeroy de Galhau.
There are encouraging signs on consumer prices and the ECB is more confident in its commitment to get inflation back toward 2% by 2025, the Bank of France Governor said at the IIF conference on the sidelines of the International Monetary Fund meetings in Morocco.
The ECB raised rates for the 10th successive meeting last month — to 4%.
“We need to balance the risk of doing too little against the risk of doing too much — I would say these risks are now at least symmetric,” Villeroy said. “In the euro area, monetary patience is now more important than activism.”
The French central banker said the ECB should also attempt to ensure a soft landing for the economy, so long as this does not interfere with its primary inflation objective.
“If we can follow a monetary path which ensures a soft landing toward destination — which means avoiding recession and keeping positive growth — rather than a hard landing, it’s a much better route for our fellow citizens,” Villeroy said.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.