Francois Villeroy de Galhau, Governor of Banque de France, and a Governing Council member at the European Central Bank
-
If we can reach our inflation target with a soft landing rather than
a hard one, it’s much better - In my judgement,
these risks are now at least symmetric, we always can do more if
needed - The risk of doing
too much on rates needs to be balanced against the risk of not doing
enough - In the risk of doing
too much, with a recession and sharp fall of inflation, we would have
to rapidly reverse course - ‘testing until it
breaks’ is not a sensible way to calibrate monetary policy - Maintaining the
current level of interest rates will bring down inflation - Have to monitor
current oil price rebound for possible effects on inflation
expectations, wages - If markets fully
incorporate our strategy, they shouldn’t expect cuts before a
sufficiently long time
Villeroy also spoke over the weekend with the same sort of message:
—
The ECB is walking a fine line, its current forecast is that inflation will hold above 3% next year
and sees it below
its 2% target only in the final quarter of
2025.