PARIS (Reuters) – The European Central Bank (ECB) will bring inflation in the euro zone back to its target of 2% by next year despite the expected volatility this year in monthly price data, François Villeroy said on Tuesday de Galhau, governor of the Banque de France and member of the board of governors of the Frankfurt institute.
The ECB reduced its rates by 25 basis points last week but made no further commitments in a context of strong wage growth and upward revisions to inflation forecasts.
The monthly flow of inflation data will be volatile due to a base effect linked to energy prices, François Villeroy de Galhau explained at a financial conference in Paris.
“This ‘noise’ is not very significant, which is why we remain more focused on the outlook; and we will take a closer look at the inflation forecasts,” he added.
“We remain convinced that, barring any external shock, we will bring inflation back to our 2% target by next year, and that we will achieve this with a soft landing (of the economy) rather than with a hard landing,” he continued.
The governor of the Bank of France reiterated his call for a gradual approach to future rate changes and said the ECB had “significant room for maneuver” to make rate cuts.
(Reporting Leigh Thomas; written by Sudip Kar-Gupta; Claude Chendjou)
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