Villeroy (ECB): Falling euro could threaten efforts to calm inflation

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The weakening euro in the foreign exchange markets could threaten the European Central Bank’s efforts to bring inflation closer to its target, said Bank member Villeroy de Galhau.

The euro was at its lowest level against the dollar since 2017. It traded slightly higher than this level early Monday.

The weakness of the euro makes imported goods and commodities in dollars (such as oil) more expensive, fueling price pressures that have already driven the eurozone to record lows.

“Let me point this out: we will closely monitor developments in the real exchange rate, as a major driver of imported inflation,” said the head of the Bank of France.

“A euro that is very weak would be contrary to our goal of price stability,” he said.

He added that a “decisive” meeting of the board. of the ECB can be expected in June after an “active summer” on the monetary policy front.

“The pace of further action will take into account real activity and inflation data, gradually. “It prevents her,” Villeroy said.

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Source: Capital

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