ECB Governing Council member Francois Villeroy de Galhau highlighted today at a conference that month-to-month inflation data will be volatile due to base effects, particularly related to energy prices.
He cautioned that this “noise” in the data is not very meaningful, and the ECB remains “outlook driven” and will focus more closely on inflation forecasts.
Villeroy expressed confidence that, barring any external shocks, ECB will bring inflation back to its 2% target by next year, achieving this with a “soft rather than a hard landing.”
He reiterated the need for a gradual approach to future rate adjustments and emphasized that ECB has “significant leeway” to cut rates before monetary policy becomes restrictive.
