MNI BRIEF: Villeroy Sees ECB Rates Peaking At 3.5% In Summer

European Central Bank rates could peak around recent market estimates of 3.5% by the summer, Bank of France Governor Francois Villeroy said in a speech on Friday.

“I think it is possible that we will have reached this peak by the summer ... which officially ends in September." he said, adding that the time the rate remains at this level will depend on core inflation. (See MNI SOURCES: 100bp Gap Between Hawk-Dove ECB Peak Rates)

Noting that rates should reach 3% following the ECB's March meeting, Villeroy said,

“We shall probably go beyond this 3%, but there will be no obligation to act automatically at each Council meeting ... This gives a sufficiently broad scope of action to be serene, open. After March there will be less monetary urgency as we will need to analyse the economic evidence more closely.”

Villeroy also described this morning’s market developments as “excessively volatile”.