PARIS (Reuters) – France’s European Central Bank policymaker François Villeroy de Gallo said on Monday the ECB had “done most of the work” in raising interest rates to fight inflation. , adding that any further rate hikes would need to be limited in number and size.
In his annual report to French President Emmanuel Macron on Monday, Villeroy said the ECB had reasons to keep monetary policy tight and there were no signs that underlying inflationary pressures were under way. weakened.
Villeroy told Le Figaro that “much of the impact on the economy in the future is due to things that are already in the pipeline, so we’ve already gone most of the way”.
ECB expected to raise rates for 7th time in a row on May 4, with policymakers unanimously agreeing to hike 25 – basis points – instead Greater 25 bps increase – sources with direct knowledge of the discussions told Reuters.
Villeroy told Le Figaro that “a few more rate hikes may be needed, but in my opinion they should be limited in number and size”, suggesting he was also looking for more small move.
Although the current inflation crisis started with energy and commodity prices, it has since spread to all goods and services.
“At this point, neither inflation, excluding energy and food, nor the broader underlying indicators show clear and converging signs of a change in trend,” Villeroy told Macron. said in the letter.
Given the magnitude of last year’s surge in inflation, Villeroy said it was “normal” for wages to catch up, albeit with a slight lag.
Per capita growth Villeroy says per capita wages including bonuses in France are expected to reach 6% this year, outpacing inflation, before recovering in Smoother speed.
With some euro zone countries such as Germany and Spain, there was little evidence in France that companies were pushing prices higher to boost profit margins, he added.
Inflation is lower than in other eurozone countries, thanks in large part to measures to cap electricity and gas prices, which the central bank estimates will Spend close to 25 billion euros ((
billion) more than 55-2023 .
Villeroy said the measures would need to be tapered over the next two years, or they risked fueling inflationary pressures in the medium term, which would require the central bank to tighten monetary policy further.