ECB Requires Critical Data Before Interest Rate Increases, Villeroy Says
ECB's Stance on Interest Rate Hikes Amid Inflation Concerns
ECB's Current Position and Recent Discussions
PARIS, May 4 (Reuters) - The European Central Bank needs clear evidence inflationary pressures are becoming entrenched to begin raising interest rates, Bank of France Governor Francois Villeroy de Galhau said on Monday.
The ECB kept rates on hold on Thursday, as was expected, but held an in‑depth discussion about raising borrowing costs to tackle surging inflation triggered by soaring energy prices and indicated a move could come as early as June.
Villeroy's Criteria for Tightening Monetary Policy
Villeroy, an outspoken dove on the ECB's governing council, said any tightening would depend above all on signs that inflation is spreading beyond its initial drivers, particularly through underlying price pressures, wage developments and inflation expectations among households and businesses.
Measuring Inflation Expectations
While those expectations are harder to measure than financial market indicators, he said the key question is whether they remain anchored over the medium term, around a three‑year horizon.
Need for Comprehensive Data Before Action
"Before any possible tightening, it is necessary to have gathered a critical mass of data," Villeroy said in an annual letter to French President Emmanuel Macron on the state of the economy.
Villeroy's Departure and Policy Caution
Villeroy, who is due to stand down from the French central bank in the coming weeks, cautioned that monetary policy must remain prudent.
(Reporting by Leigh Thomas, editing by Inti Landauro)
