PARIS (Reuters) – Interest rates at the European Central Bank (ECB) have reached a plateau where they are expected to remain in the coming quarters, François Villeroy de Galhau, member of the ECB’s governing council, said on Monday. deeming it premature to speculate on a rate cut.

The ECB ended a streak of 10 consecutive hikes last month by leaving rates unchanged, prompting investors to question when rate cuts might take place.

“There are not only summits and descents: there are also plateaus, where you can feel the effects of altitude and appreciate the view,” said François Villeroy de Galhau, who is also governor of the Bank of France.

“This is probably what we will do in the next (ECB monetary policy) meetings and the next quarters,” he told the Society of Professional Economists in London.

The conflict in the Gaza Strip and variations in oil prices do not appear to be stopping the decline in inflation, although fluctuations can be expected in the coming months, he stressed.

The ECB has set itself the objective of bringing inflation in the euro zone to around 2% by 2025, although Villeroy de Galhau insists that this figure should be seen as an order of magnitude, not a target. to the nearest comma.

While inflation has fallen rapidly in recent months as the euro zone economy has slowed, the governing council member considers a “soft landing” more likely than an entry into recession.

Although interest rates are expected to remain at current levels for the foreseeable future, Villeroy de Galhau said it may be necessary to end Pandemic Emergency Purchase Program (PEPP) bond buybacks. ) before the planned date, end of 2024.

He added that in the future the ECB may need to return to some form of interest rate planning, provided this does not tie its hands.

“Central banks must be predictable, but not constrained by their commitments,” he stressed.

(Written by Leigh Thomas, Tangi Salaün)

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