Bank of France President Francois Villeroy de Galhau emphasized that he is in no rush to raise rates further after hiking to 4.00% last week.
“From today’s perspective, patience is more important than raising rates further,” he told Bloomberg.
He was quizzed on whether rising oil prices could jeopardize the central bank's inflation forecasts, which call for $77.90 in 2025. He said they are "very attentive" to oil but it "doesn’t put into doubt the underlying disinflation."
If anything, rising oil prices now could help the ECB hit 2% inflation in 2025 as the y/y comps will be more favorable if we go into 2025 with a higher oil price benchmark. The risk would be that the pressure from high oil forces the ECB to hike again late this year or in 2024.
For now, the trend is a lower EUR/USD as a further hike from the Fed looks more likely than an ECB hike.
