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PARIS (Reuters) – The European Central Bank is increasingly confident that inflation will return to its 2 percent target next year, Francois Villeroy de Galhau, governor of the Banque de France and a member of the Frankfurt-based bank’s governing council, said on Friday.
The ECB began easing interest rates with a first cut in June and the institution’s governors have said the pace of further cuts will depend on upcoming data.
Speaking at a news conference, François Villeroy de Galhau said inflation data, “inherently noisy,” creates a risk of overreaction to news with high volatility potential, particularly for the rest of the year.
“Since there are now fewer surprising data and revisions to the current assessment are more minor than two years ago, we have more confidence in the forecasts and have more room to maneuver not take into account small shocks in the disinflation process,” he added.
The ECB expects inflation to fluctuate but remain above its 2% target for the rest of the year and then ease back to 2% next year.
(Written by Augustin Turpin with Leigh Thomas)
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