PARIS (Reuters) – European Central Bank interest rate hikes are likely to peak out by the end of summer, but the more important issue now is how long rates stay elevated than the exact level, French ECB policymaker Francois Villeroy de Galhau said on Monday.
Villeroy said the lag between the ECB’s exceptionally fast rate hikes over the last 10 months and their impact on the economy was more likely at the upper end of the two-year range economists expect.
That made monitoring the pass-through of those hikes, which saw rates increased by 375 basis points, more important for monetary policy moves in the coming months than how much further rates are increased.
“I expect today that we will be at the terminal rate not later than by summer,” Villeroy told an event held at the Bank of France.
“In the meantime, we have three possible Governing Councils either for hiking or pausing but don’t deduce a guidance from this or a preference for a given terminal rate,” he added.
(Reporting by Leigh Thomas; editing by Richard Lough)
