(Finance) – The Governing Council of the ECB has increased key interest rates at an accelerated pace, by a total of 250 basis points in 5 months. In doing so, it has reached the “normalization zone”, in which monetary policy neither stimulates nor curbs inflation. “In 2023, they will most likely be needed new interest rate hikes in the coming months, at a pragmatic paceto bring inflation back to 2% within the two-year period of monetary policy intervention”. This was stated by Francois Villeroy de Galhau, governor of the Bank of France and member of the Governing Council of the European Central Bank (ECB), in the Finance Committee of the French Senate.
Villeroy said that “so far economic activity has surprised us rather positively and inflation has surprised us rather negatively.” According to forecasts from Frankfurt, “the 2023 should score a strong slowdown but escape the dreaded “hard landing” a few months ago – he underlined – growth should be weakly positive, with a central scenario of 0.5% in the euro area”.