MNI BRIEF: Villeroy: ECB Giving More Weight To Projections Vs Data

The ECB Governing Council will give more weight to its economic projections than to current data when it decides in rate cuts in the coming months, Bank of France Governor Francois Villeroy says in a speech Friday.

Villeroy said this approach was consistent with the current strategy of ‘pragmatic gradualism’ which he has mentioned in previous speeches. He noted that incoming data are “inherently noisy” and that basing decisions on rhem risks “overreacting to volatile news, especially until the end of this year”.

Villeroy said that recent smaller data surprises and revisions had boosted the ECB’s confidence in its forecasts so that it could ignore “bumps” in the disinflationary process. (see MNI SOURCES: September Rate Cut In Sight For ECB)