PARIS (Reuters) – Interest rates at the European Central Bank (ECB) are expected to peak over the summer and a drop is not expected this year, Banque de Paris Governor François Villeroy de Galhau said Friday. France and member of the Board of Governors of the Frankfurt institution.
In a speech addressed Friday to the Center of the financial professions François Villeroy de Galhau declared that it was “probable” that the “terminal rate” will be reached in the summer, at the latest in September.
The ECB raised its interest rates by 50 basis points in early February – bringing their rise since July to 300 basis points in total – and it expects at least another increase of the same magnitude at its next meeting.
The latest announcements from the ECB had prompted the markets to revise their expectations of the final level of rates downwards.
But since then, comments from several central bank officials have challenged market expectations and the final level of the deposit rate is now estimated at around 3.75%, suggesting a rate hike of 125 basis points. additional.
Francois Villeroy de Galhau said rates will be kept high for as long as necessary to bring inflation back towards the ECB’s 2% target.
A rate cut is “certainly” not expected this year, added the Governor of the Banque de France. Such a decision would depend not only on the slowdown in headline but also underlying inflation, which excludes volatile elements such as energy prices, he continued.
(Report Leigh Thomas, Kate Entringer and Laetitia Volga, edited by Matthieu Protard)
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