ECB member Villeroy: totally justified to keep accommodative monetary policy for now

FILE PHOTO: Francois Villeroy de Galhau, governor of the Bank of France, attends the Group of 20 (G-20) high-level seminar on financial innovation “Our Future in the Digital Age” on the sidelines of the G-20 finance ministers and central bank governors meeting in Fukuoka, Japan, on Saturday, June 8, 2019. Kiyoshi Ota/Pool via REUTERS

PARIS (Reuters) – European Central Bank member Francois Villeroy de Galhau said on Friday it was totally justified to keep an accommodative monetary policy for now.

Villeroy, who is also the governor of the Bank of France, also told BFM Business radio that the ECB sees the mid-point of its forecast horizon for a 2% inflation target coming in around 12-18 months in the euro zone.

The European Central Bank pledged on Thursday to keep interest rates at record lows for even longer to boost sluggish inflation and warned that the rapidly spreading Delta variant of the coronavirus poses a risk to the euro zone’s recovery.

The central bank of the 19 countries that share the euro said it would not hike borrowing costs until it sees inflation reach its 2% target “well ahead of the end of its projection horizon and durably” — a controversial decision that generated significant dissent.

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