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ECB's Villeroy says bank close to rates peak

By AFP - Sep 03,2023 - Last updated at Sep 03,2023

The Governor of the Banque de France, François Villeroy de Galhau, at the World Economic Forum in Davos, May 23, 2022 (AFP file photo)

PARIS — The European Central Bank (ECB) is "close to the peak" of its inflation-fighting interest rate increases, Bank of France governor Francois Villeroy de Galhau said Friday.

While eurozone central bankers' "options are open" between further rate rises or holding steady at their next meeting on September 14, "we are close or very close to the peak of our interest rates," ECB Governing Council member Villeroy told journalists at a Paris breakfast meeting.

The Frankfurt institution began rate increases in July last year to tame soaring inflation in the 20-nation eurozone, with eight hikes so far bringing them to 3.75 per cent — a level not seen since 2001.

Minutes from the governors' last meeting in July showed that they considered holding firm but ultimately decided on a 0.25-per cent raise.

Whatever the decision this month "we are far from the moment where we can start thinking about lowering" interest rates, Villeroy said.

EU statistics agency Eurostat said Thursday that price growth held steady at 5.3 per cent in August, far higher than the ECB's two-per cent target.

The same day, ECB board member Isabel Schnabel said that "a sufficiently restrictive monetary policy is critical for bringing inflation back to our two-per cent target in a timely manner" — without tipping the bank's hand on the September decision.

Villeroy also said Friday that the Bank of France will slightly up its forecast for this year's French growth later this month, from its current 0.7 per cent — slightly below government expectations.

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