ECB’s next rate decision should be ‘orderly and predictable’ – Villeroy


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PARIS, Aug 31 (Reuters) – The European Central Bank’s decision on interest rates next week must be “orderly and predictable”, French ECB policy chief Francois Villeroy de Galhau said on Wednesday.

With eurozone inflation at record highs, policymakers are increasingly concerned that even long-term expectations could exceed the ECB’s 2% target.

This leaves the choice at its next policy meeting next week between a 50 and 75 basis point hike after the ECB raised the deposit rate from 50 basis points to zero last month in its first hike in more than a decade.

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“After a first rate hike in July, we will make a decision on the next step next week. We must do it with determination but (also) in an orderly and predictable way,” Villeroy said in an interview with French regional newspaper Ouest. France. .

Villeroy said the surge in inflation, initially triggered by soaring energy prices, was spreading across the economy and fueling services, although there were no signs of a downturn. a spiral in wage prices at present.

Official data released on Wednesday showed inflation in the 19 countries sharing the euro accelerated to 9.1% in August from 8.9% a month earlier.

That was slightly stronger than expected, adding pressure on more dovish ECB policymakers for a 50 basis point move next week. Read more

Despite the current energy price shock, Villeroy said a recession in Europe was unlikely for 2022, but nothing could be ruled out for next year.

He added that the French economy would grow at least as fast as the 2.3% forecast by the central bank in June, but would experience a sharp slowdown in 2023, but probably not a recession.

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Reporting by Leigh Thomas Editing by Alexandra Hudson

Our standards: The Thomson Reuters Trust Principles.


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