MNI BRIEF: BdF Villeroy Hopes ECB At Terminal Rate By Summer

Bank of France Governor Francois Villeroy de Galhau said Thursday that the ECB should aim to reach a terminal peak in rates between now and the summer, although he stressed it was still too early to target a definitive level.

“After having reached a level close to the ‘neutral rate of interest’ of 2% in December, we are embarking on the second phase towards monetary stabilisation: it would be desirable to reach an appropriate ‘terminal rate’ between now and next summer, but it is too early to prejudge where that level is,” Vilelroy said in New Year comments on the economic and monetary outlook.

Villeroy warned against becoming too ‘fetishistic’ about overly mechanical hikes in rates and said that the duration of rates at the terminal level would be as important as the level itself, saying the ECB must "remain pragmatic and guided by the data we see, including underlying inflation."