PARIS (Reuters) – French ECB policymaker François Villeroy de Gallo said on Wednesday that the European Central Bank’s interest rate could reach a level before the end of the year that neither stimulates nor slows the economy s level.
Villeroy, who is also the governor of the Bank of France, said that while it was too early to say at what level the policy normalization cycle would end, the neutral rate – sometimes referred to by economics Home is called R- which provides some clues on the way forward.
“I believe that in the euro area, nominal Rcan be estimated at less than or close to 2%, we may Get to that level by the end of the year,” Villeroy told the Financial Times. The International Monetary Fund is in Washington.
“Until then, we must act in a firm and orderly manner.”
The European Central Bank on Thursday 50 bps move weeks after an unprecedented 75 bps rate hike and pledges to do more in coming months as euro zone inflation falls at its fastest pace In nea
Villeroy added that the ECB will move from normalizing interest rates to tightening above the neutral rate only if it proves necessary.
