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ECB's Villeroy: underlying inflation dynamics not yet solid enough

We should not plan to increase interest rates until we have seen a sustainable evolution in inflation, says Bank of France Governor Francois Villeroy de Galhau.

Key quotes:

• Underlying inflation dynamics not yet solid enough to durably support prices

• Core inflation has risen but remains at modest levels despite firming economic & labour recovery

• No doubts economic recovery & job creation will push wages higher, but questions remain on pace

• We are confident in the effectiveness of our monetary policy & are prepared to be patient about how long it lasts

• We must reduce the rate of our net asset purchases while keeping our overall monetary policy significantly accommodative

• Studies show we can continue to put downward pressure on the yield curve while keeping stock of assets high

• We continue to monitor exchange rates closely due to possible implications on inflation over the medium-term

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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