ECB's Villeroy: Could reach neutral rate by end of 2022

Eren Sengezer FXStreet

European Central Bank (ECB) policymaker Francois Villeroy de Galhau said Wednesday that he estimates the euro area neutral rate at below or close to 2% and added that they could reach it by the end of the year, per Reuters.

Additional takeaways

"Monetary normalisation is fully warranted in the euro area, too early to say what the final interest rates will be."

"Until we reach neutral rate, we definitely have to act, in a determined but orderly way."

"Only beyond the neutral rate would tightening begin if needed."

"Not having a forward guidance does not mean, cannot mean, not having a narrative and a monetary strategy."

Market reaction

The EUR/USD pair showed no immediate reaction to these comments and was last seen trading at 1.0002, where it was up 0.32% on a daily basis.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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