MNI BRIEF: EZ Inflation To Beat December Projection - Villeroy
Interest rates will likely peak this summer, with inflation falling to the ECB’s 2% target level by early 2025, Banque de France governor Francois Villeroy de Galhau predicted in a joint interview with Bundesbank boss Joachim Nagel on Tuesday -- a marked downward revision from previous official estimates.
Policymakers are expected to hike rates by another 50bps when they meet next week in Frankfurt, with another half-point hike the likely starting point for discussions in March (MNI SOURCES: ECB Doves Eye Smaller Hikes As Inflation Falls).
December's Eurosystem staff projections put average HICP inflation at 6.3% in 2023, 3.4% in 2024 and 2.3% in 2025. However, “we will probably have reached the peak in interest rates by next summer, and inflation will come down to the 2% level by the end of 2024 to 2025,” Villeroy said.