It is an exaggeration to speak of a return of inflation in the euro zone, said Thursday François Villeroy de Galhau, member of the board of governors of the european central Bank (ECB), thus signaling that he is not in favour of changing the policy of the ECB in reaction to the acceleration of the price rise in the month of December.
consumer prices in the monetary union grew by 1.1% year on year in December, announced last week by Eurostat, the european agency for statistics. It was the highest inflation rate since September 2013.
“It should not be a surprise,” said François Villeroy de Galhau. This higher rate of inflation is in line with the forecasts of the ECB, has-t-he stressed. “We are not yet at our goal of 2%”.
After the inflation figures for the month of December, some economists and politicians in germany have argued for a reorientation of the policy of the ECB. The inflation rate in Germany stood at 1.7% in December, more than double the 0.8% increase observed in November.
“Some seem to worry about a return of inflation. It is very far-fetched,” said François Villeroy de Galhau, who is also the governor of the Bank of France. The differences of inflation rates between the countries of the euro area will shrink over the year, he added.
The central banker also mentioned the uncertainties related to the vote of the British in favour of an exit of the Uk from the european Union.
We do not know how will go on the negotiations on the Brexit, said François Villeroy de Galhau, but Paris should take the opportunity to strengthen its attractiveness to financial institutions that may seek to leave London. French officials are conducting confidential discussions but in a serious way with international groups on this subject, said the central banker. Some multinational companies exhibit a certain interest, he added.
-William Horobin, The Wall Street Journal
(French Version of Lydia Butcher) ed: ECH