ECB’s Villeroy: The duration of terminal rate is more important than the level

That’s an interesting comment because yesterday Stournaras was talking about 6 or 12 months at the peak. That’s a wide window and highlights that the next big debate the ECB will have isn’t a September hike (assuming July) but when to start signalling lower rates.

  • Future rate decisions to depend on inflation data
  • Inflation is past the peak in France and the eurozone

Meanwhile, the Bank of France forecasts 2023 GDP at +0.7% vs +0.6% previously and just 1.0% in 2024, down from 1.25%. Inflation is seen at 2.4% in 2024 and 1.9% in 2025. None of these numbers are arguments for keeping rates high for long.

The comments were from an interview in Los Echos.

This article was written by Adam Button at Source