MNI BRIEF: Villeroy Wants ECB Med-Term Inflation Approach Kept
MNI (BRUSSELS) - Bank of France Governor Francois Villeroy said Wednesday that maintaining the ECB's medium-term approach to hitting its 2% inflation objective is his preferred option for the central bank's upcoming strategy review.
"Under a medium-term orientation a central bank does not have to react to short-term point deviations, but rather respond to inflation dynamics that risk pushing it off target," Villeroy said in the speech at the London School of Economics.
"What matters is not so much the level of deviation from target at one point in time, but the trend and persistence of expected deviations, in other words, whether this deviation is more likely to increase or to decrease," he added.
That said, Villeroy stressed that the approach must also continue to be underpinned by "clear communication about the horizon and the journey back to target".