Francois Villeroy de Galhau, ECB Governing Council member and head of France's central bank, said the ECB will bring consumer inflation back to its 2% target by next year, despite the expected "noise" in monthly data.
Last week, the ECB eased monetary policy as expected, but gave no commitment about further rate cuts. ECB president Christine Lagarde noted that risks to growth are balanced in the near term but are skewed towards the downside in the medium term. According to her, the euro area economy is expected to continue to recover in the coming quarters. She also noted that the ECB will need more data to constantly confirm the disinflationary path, but stressed that the decision and data releases are not perfectly synchronized. Also, she highlighted that the ECB is not pre-committing to a particular rate path.
Meanwhile, Villeroy de Galhau said today that the monthly flow of inflation data will be volatile due to the base effect of comparative numbers for energy. "We remain confident that, barring an external shock, we will return inflation to our 2% target by next year, and that we will achieve it with a soft, not a hard landing," he said, adding that the ECB has "considerable leeway" to cut rates before monetary policy becomes restrictive.