ECB needs "critical mass of data" before hikes, Villeroy says

PARIS, May 4 (Reuters) - ‌The European ​Central ​Bank needs clear evidence inflationary pressures are becoming entrenched to begin raising interest ‌rates, Bank of France Governor Francois Villeroy ⁠de Galhau said on Monday.

The ECB kept rates on ‌hold on Thursday, as ‌was expected, but held an in‑depth discussion about raising borrowing costs to tackle surging inflation ​triggered by soaring energy prices and indicated a move could come as early as June.

Villeroy, ⁠an outspoken dove on the ECB's governing council, said any tightening ​would depend above all on signs that inflation is spreading beyond its initial ​drivers, particularly through underlying price ‌pressures, wage developments and inflation expectations among households and businesses.

While those expectations ⁠are harder to measure than financial market indicators, he said the key question is whether they remain ⁠anchored over the medium term, around a three‑year horizon.

"Before any ​possible tightening, it is necessary to have gathered a critical mass of data," Villeroy said in an annual ‌letter to French President Emmanuel Macron on the state of the economy.

Villeroy, ‌who is due to stand down from the ⁠French central bank in ‌the coming weeks, ​cautioned that monetary policy must remain prudent.

(Reporting by Leigh Thomas, editing by Inti ‌Landauro)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Germany evacuates about 1,800 people as wildfire reaches border village
• Philippines' Marcos confident on economic cooperation with China, despite rows
• Asian stocks head for strong weekly gains as US rate hike bets fade