ECB Interest Rates Outlook

PARIS (Reuters) – The European Central Bank’s interest rates should reach a level that no longer hinders growth by this summer if inflation is controlled, according to ECB policymaker Francois Villeroy in a recent speech.

Inflation in the 20-member euro zone decreased throughout last year, nearing the ECB’s 2% target. However, it increased to 2.4% in December from 2.2% in November, a change that Villeroy indicated was largely anticipated.

> “If the pullback in inflation is confirmed in the coming quarters as we expect, common sense would have us heading towards the neutral rate without slowing the pace by summer,” Villeroy stated during his New Year’s address at the French central bank, which he oversees.

The ECB estimates that the neutral rate is approximately 2%.