The European Central Bank’s current level of interest rates is appropriate as policymakers are increasingly confident inflation will return to the target of 2%, Governing Council member Francois Villeroy de Galhau said.
(Bloomberg) — The European Central Bank’s current level of interest rates is appropriate as policymakers are increasingly confident inflation will return to the target of 2%, Governing Council member Francois Villeroy de Galhau said.
The Bank of France governor’s comments came after data showed euro-area core inflation eased to its slowest pace in a year.
Villeroy also said volatility on government bond markets, which saw Italy’s borrowing costs compared to Germany reach a six-month high on Thursday, is “somewhat excessive.”
Villeroy commented in a post on LinkedIn:
- “This morning’s data demonstrates that both headline and core inflation are declining progressively across Europe, underlining that the ECB’s monetary policy is effective. In France, we also see a significant decline in underlying inflation to 3.6%, particularly in services. These data strengthen our confidence that inflation in the euro area and in France will return toward its target of 2% by 2025 , which confirms that the current level of our key interest rates is appropriate. Recent volatility in the market for long bonds has been somewhat excessive.”
–With assistance from James Hirai.
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