François Villeroy de Gall, a member of the European Central Bank’s Board of Governors, said the bank should focus on raising interest rates to close to 2 per cent by the end of this year, before considering any new rate hike after that.
And Bloomberg Agency quoted Villeroy, the governor of the French Central Bank, as saying that the European Central Bank must be “decisive and orderly” in reaching the so-called neutral interest, that is, the level that neither stimulates nor slows the economy, adding that it is too early to know the final level at which Accessible for interest rates.
“In the eurozone, the neutral rate could be less than or close to 2 per cent in nominal terms, and we could reach it by the end of the year,” Villeroy said. “It is normal to reach that level. But the rate can be increased further if necessary.” .
“Inflation has crossed the inflection point, affecting consumption and investment capabilities and disrupting financial planning,” said Klaas Knott, a member of the European Central Bank’s Board of Governors.
“In response, the European Central Bank agreed to raise interest rates in order to calm business circles and control private expectations,” he added, in statements during the “Euro V” economic conference, reported by Bloomberg News.
“We will continue to do so until the inflation outlook stabilizes at the 2 percent target over the medium term,” Klass added.
The European Central Bank’s Governing Council is expected to decide at its meeting next month to raise rates by 75 basis points.
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