French ECB member says dovish

European Central Bank Governing Council Member Francois Villeroy de Galhau said that the bank could keep the deposit rate at 4 percent for as long as necessary in order to control inflation. This statement was interpreted as the ECB member not being in favor of further interest rate hikes. The ECB made its 10th consecutive interest rate hike at its meeting last week. While President Christine Lagarde did not make a clear statement about whether the levels reached were the peak or not, hawkish members within the bank made statements that last week’s decision might not be the last interest rate hike. Speaking to La Croix newspaper, Villeroy said, “We need to insist on interest rates that are the cure for this disease. We will keep ECB interest rates at the current 4 percent level for as long as necessary.” On the other hand, famous economist Nouriel Roubini, who participated in a Bloomberg TV broadcast yesterday, said that both the ECB and the Bank of England need to raise interest rates further in order to eliminate the risk of stagflation. Roubini, known for his pessimism, said the recent rise in oil prices would keep headline inflation high and that any talk of easing monetary policy would be premature.