The inflation rally that has taken policymakers by surprise in recent months is nearing its peak, according to Francois Villeroy de Galhau, a member of the European Central Bank’s board, as reported by Bloomberg.
The release of consumer price data in France in December shows the first signs of stabilization and the ECB expects the upward pressure to subside during 2022, the governor of the Bank of France said in a statement for the new year.
“Inflation is close to peaking in our country and in the Eurozone,” says Villeroy. “While we remain very cautious, we believe that supply chain difficulties and energy pressures should gradually subside over time.”
The central banker also reiterated his forecast for a “new inflation regime” in which price increases will be closer to the ECB’s 2% target compared to previous years before the pandemic. Based on this, monetary policy is expected to “gradually normalize”, he notes.
At the same time, Villeroy appeared reassuring about the risks of the micron mutation, noting that the economic impact would be “relatively limited”.
“We have learned over the last two years that every wave of Covid, no matter how severe, has a declining impact,” he said.
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Source From: Capital
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