- The ECB has won the battle against inflation
- Inflation is not too low in France
- French inflation undershooting on temporary factors
- Decision to leave early is personal
ECB’s Villeroy
Villeroy is the governor of the French central bank and he’s generally considered a dove, although he changed his stance to neutral several months ago like most other ECB policymakers.
The fact that he’s downplaying the below-target inflation in France is a strong confirmation of his neutral stance and the overall ECB’s wait-and-see approach to interest rates policy.
The ECB has been the most successful central bank in bringing inflation down to target without causing pain in the economy. In fact, core inflation is now just a bit above the 2% target and the unemployment rate remains at record lows. Moreover, given the prior rate cuts and increased fiscal spending, the economic activity has been picking up steadily.
Villeroy recently announced that he will be stepping down in June for personal reasons, over a year earlier before his term ends, but that won’t affect the ECB policy of course.
