ECB targets 2% inflation by next year – Villeroy

The European Central Bank (ECB) aims to bring inflation back to its 2 per cent target by next year, despite potential fluctuations in monthly data, ECB policymaker Francois Villeroy de Galhau stated on Tuesday, according to Reuters.

Speaking at a financial conference in Paris, Villeroy explained that the month-to-month volatility in inflation figures, largely due to the base effects from energy price comparisons, would create “noise” that should not be over-interpreted. He emphasised that the ECB remains focused on the broader inflation outlook and forecast.

The ECB recently lowered its interest rates by a quarter of a percentage point from a record high without committing to further cuts amidst ongoing concerns about wage growth and rising inflation projections.

Villeroy, who also heads the French central bank, underscored the importance of a cautious and gradual approach to future rate adjustments, noting that the ECB has “significant leeway” to cut rates before monetary policy becomes restrictive.

He expressed confidence that, barring external shocks, the ECB will achieve its inflation target by next year, aiming for a “soft landing” in the process.