Bank of France Governor Villeroy-de-Galleau, a member of the European Central Bank’s policy committee, said on the 17th that the European Central Bank’s (ECB) decision to suspend interest rate hikes at its policy committee meeting in October was fully justified by slowing inflation. .
Speaking in Paris on banking supervision, he pointed out that after the ECB began tightening last year, the pace of price increases had slowed significantly and that indicators of underlying inflation had clearly passed their peak in spring this year.
“This is proof of the effectiveness of monetary policy and fully justifies the policy committee’s decision to suspend the series of interest rate hikes.”
Villeroy-de-Galleau said the ECB was now confident of pushing inflation back towards 2% by 2025, but said the bank would be patient and keep interest rates at current levels. He said he would keep interest rates steady for a period of time to allow the effects of monetary policy to “fully permeate.”
Regarding the situation in French financial institutions, he said that higher interest rates are generally beneficial for banks and insurance companies.
capital markets union
On the same day, ECB President Lagarde spoke about capital market integration. “The Capital Markets Union is an essential project,” he said in a speech in Frankfurt.
“In the changing landscape we face today, with the challenges of deglobalization, demographics and decarbonization becoming ever greater, integrated capital markets are essential to success.”
Original title: ECB’s Villeroy Says Slowing Inflation Justifies Halting Hikes, Lagarde Says Capital Markets Union Is an Indispensable Project (excerpt)
(Updated with the addition of ECB President Lagarde’s speech)