François Villeroy de Galhau, Bank of France Governor and ECB Governing Council member, warned today that growing risks could alter ECB’s monetary policy path. He said that “we should pay close attention to a possible cumulative risks scenario, the likelihood of which has increased recently: an adverse loop of protectionist threats, unfavorable exchange rate movements, and abrupt financial markets corrections.”

And he added that “such a negative loop would tighten financial conditions, and deteriorate the growth outlook in the euro zone. ” Also, “our monetary policy stance would then have to be adapted, depending on the ultimate impact on inflation prospects.”

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