ECB Governing Council member Francois Villeroy de Galhau has warned of the risk of entrenched inflation yesterday, stating, “We now face the risk of entrenched inflation, which lies in the underlying or core component. In other words, inflation has become more widespread, and potentially more persistent.”
Villeroy emphasized that the ECB’s monetary policy response to rising inflation has been strong and swift. However, he also noted a shift in focus, saying, “We at the ECB are now moving from a ‘sprint’ to a ‘long-distance race’.” He added that the inflation outlook, underlying inflation readings, and the effectiveness of policy transmission will be the key factors in upcoming decisions on potential new rate hikes.
