ECB’s Position On Rates Is Good But Not Fixed, Villeroy Says
James WhitmanThe European Central Bank's monetary policy is well positioned but could yet shift as officials grapple with risks including those emanating from financial markets, Governing Council member Francois Villeroy de Galhau said.
The European Central Bank's monetary policy is well positioned but could yet shift as officials grapple with risks including those emanating from financial markets, Governing Council member Francois Villeroy de Galhau said.
The remarks follow the ECB's decision to leave its deposit rate at 2% for a third straight meeting, with President Christine Lagarde saying she and her colleagues "will do whatever is needed to make sure that we stay in a good place."
"It's a good position, but it's of course not a fixed position," Villeroy said Friday in a statement. "We must maintain full optionality to act as needed."
Most officials have signaled little appetite to add to the eight quarter-point reductions delivered through June, with inflation near the 2% target and the economy continuing to grow. But a minority including Villeroy has stressed further easing should be an option.
Data earlier in the day showed inflation in the 20-nation euro zone moderated to just above the ECB's goal. Figures published Thursday revealed a stronger-than-anticipated third quarter for the bloc, where business surveys for October have also perked up.
Other ECB policymakers speaking after this week's meeting urged a steady hand on borrowing costs.
"The economic situation has gradually improved," Estonia's Madis Muller said, calling the current level of rates "appropriate."
Austria's Martin Kocher also acknowledged "slightly better" data since the ECB's last monetary-policy meeting in September, while Finland's Olli Rehn said "it made sense to wait for new data and, in particular, our comprehensive economic forecast in December."
Those projections will provide a first look at 2028, with some officials urging a response if they point to a signification undershoot in the pace of consumer-price gains. Kocher and Latvia's Martins Kazaks played down such fears, however.
"I would not overestimate the importance," Kazaks said. "Uncertainty remains high and is unlikely to disappear, so forecasts will come with a very large margin of error."
Villeroy, who'd said before this week's meeting that a rate cut is more plausible than a hike as the ECB's next move, said on Friday simply that flexibility will remain key.
"More than ever, agile pragmatism, guided by data and forecasts, will be essential in our upcoming meetings," he said.
