ECB Villeroy said rates nearing a high plateau

Speaking at a conference in Aix-en-Provence, France, ECB Governing Council member Francois Villeroy de Galhau stated that Eurozone was nearing the “high point” of interest rates, a level expected to be sustained to allow full transmission of monetary policy effects.

Villeroy added, “But when I say high point this isn’t a peak, rather it will be a high plateau, on which we will have to remain for a sufficiently long time to fully transmit all the effects of monetary policy.”

Joining him on the panel was fellow Governing Council member Mario Centeno, who underlined ECB’s focus on headline inflation, noting its more rapid than anticipated decrease. However, he also highlighted the importance of core inflation, which he acknowledged was not dropping as swiftly.

Centeno stressed, “We target headline inflation, that’s very important. And headline inflation is coming down, actually it’s coming down faster than the way up.”

Centeno went on to add, “Core inflation stands out as a very important indicator. It’s not coming down as fast as headline inflation, but we also need to remember that in the way up it played exactly the same trajectory. So we need to remain confident too in the way we are fighting inflation.”