PARIS, April 2 (Reuters) – The European Central Bank’s next interest rate move will very likely be an increase although it is still too early to say when it will start hiking, ECB policymaker Francois Villeroy de Galhau said on Thursday.
Villeroy, who is also governor of the Bank of France, said the current energy price spike was quickly feeding into headline euro zone and French inflation data, although underlying inflation remained “firmly under control”.
Nonetheless, the prolongation of the conflict in the Middle East was a negative factor for the outlook and as things currently stand the situation was closer to the ECB’s intermediate adverse scenario than to its baseline scenario upon which it based its economic forecasts last month.
Against that backdrop, Villeroy said the next change in the ECB’s interest rates were “highly likely to be upwards”, speaking at Paris Sciences Po university.
“It is far too early to predict a timetable for ECB interest rate rises but it is clear that we have the capacity to act when and in whatever way necessary,” Villeroy added.
(Reporting by Leigh Thomas;Editing by Sudip Kar-Gupta)
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