“The ECB will bring inflation back to 2% by the end of 2024 or 2025”, says François Villeroy de Galhau

(Boursier.com) — Ultra-low or even negative rates are a thing of the past. The European Central Bank will not need to return to ultra-low interest rates as inflation settles into a new regime close to its medium-term target of 2%, according to François Villeroy de Galhau, a member of the Board of Governors. “I personally think that once we fight inflation and get back to 2%, we will be in a new inflation regime, probably closer to our target,” said the Bank Governor. France quoted by ‘Bloomberg’. “So we will probably have in the medium term a level of interest rates that will be more normal than in the recent past.”

In an online conference, the leader said that in the short term, the ECB will focus on tackling underlying inflation, which is “far too high”. “Monetary policy must act and monetary policy is capable of acting to counter the rise in underlying inflation”.

“The ECB will bring inflation back to 2% by the end of 2024 or 2025. This is not only our forecast, it is also our commitment,” added François Villeroy de Galhau. “What we are seeing so far on activity in the Eurozone, whether in Germany, France or elsewhere, is better news than we feared a few months ago. We will most likely avoid a recession. this year…I don’t think we have to choose between fighting inflation or avoiding a recession; we will avoid a recession and we will fight inflation. This better economic environment probably makes our monetary task easier.”