Market: The rise in oil prices does not change the ECB’s inflation forecast according to François Villeroy

PARIS (Reuters) – The surge in oil and gasoline prices does not change the European Central Bank’s (ECB) forecast of a drop in inflation towards 2% by 2025, François said on Saturday Villeroy de Galhau, governor of the Banque de France and member of the Governing Council of the ECB.

“The price of oil and the price of gasoline at the pump is obviously very sensitive, but it is not total inflation,” he declared on France Inter.

“Gasoline consumption at the pump represents about 5% of our total consumption, so it is a small part of total inflation, even if it is what is seen the most. The valuations of the price of oil prices do not call into question in our eyes the underlying trend of disinflation,” he said, adding that the economy was not facing the generalized shock on energy and raw materials that it experienced in early 2022.

“I will say it again this morning, our forecast and our commitment is to bring inflation back towards 2% by 2025,” he continued.

The price of Brent is currently trading near $100 a barrel, with investors bracing for a supply shortfall in the fourth quarter after major producers like Saudi Arabia and Russia extended their supply cuts.

François Villeroy de Galhau also reiterated that the ECB’s key rates, raised ten times in a row to a record 4%, were now at an adequate level.

“Now we have to be perseverant, keep rates at this level for as long as it takes (…), seen from today, patience is more important than raising rates further,” he declared. .

(Report by Gilles Guillaume and Sybille de la Hamaide)

Copyright © 2023 Thomson Reuters

Source link -84