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:
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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.
