The European Central Bank should reach its peak interest rate by September, Governing Council member Francois Villeroy de Galhau said.
(Bloomberg) — The European Central Bank should reach its peak interest rate by September, Governing Council member Francois Villeroy de Galhau said.
“It seems to me desirable to reach this terminal rate by the summer, that is to say by September at the latest,” the French central bank chief told lawmakers in Paris on Wednesday, highlighting the ECB’s “commitment to bring this inflation down to 2%.”
The ECB has already raised borrowing costs by 300 basis points and is expected to hike by another half-point later this month — that would bring the deposit rate to 3%. Investors on Tuesday boosted bets on the peak to 4% for the first time after inflation in France and Spain came in unexpectedly hot.
“The first figures for February published yesterday for Spain and France call us to be vigilant, and to persevere in our monetary action,” Villeroy said. “According to our forecasts, inflation should reach its peak in this first half and could have halved by the end of the year.”
Still, the core inflation rate continues to rise, he said. “Consequently, no one can any longer deny that monetary policy can react, and must react.”
–With assistance from Bastian Benrath.
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