European Central Bank policymaker François Villeroy de Galhau said on Thursday that the central bank’s next move should be “guided by the data, not the date,” cautioning colleagues against locking in a rate hike at the June 10-11 meeting without sufficient evidence of broadening inflation pressures.
Keeping Options Open
The outgoing Bank of France governor urged ECB officials to keep all options open ahead of June, warning that the central bank cannot guarantee a rate increase at the upcoming session. Villeroy said policymakers will focus on measures of price increases in goods and services excluding energy, as well as shifts in inflation expectations, before deciding whether to act.
His comments stand in contrast to those of fellow Governing Council member Peter Kazimir of Slovakia, who said on Monday that a June rate hike is “all but inevitable” given persistent price pressures and reduced growth prospects across the eurozone.
Second-Round Effects in Focus
Villeroy has repeatedly stressed the importance of monitoring “second-round effects” from the energy shock triggered by the conflict in Iran. Speaking on France 5 television earlier this week, he said there are “not yet enough signs of this propagation” to justify raising rates. “If we see such second-round effects, we’ll act and raise rates to prevent inflation becoming broad and sustainable,” he added.
The ECB held rates steady at its meeting last Thursday but signaled that a hike would be considered in June. Headline inflation in the euro area climbed to 2.5% in March, driven largely by a 4.9% rise in energy prices, though core inflation remained more contained.
A Departing Voice of Caution
Villeroy, who is due to step down from the Bank of France in the coming weeks, has consistently advocated patience. In an annual letter to French President Emmanuel Macron, he wrote that “before any possible tightening, it is necessary to have gathered a critical mass of data,” emphasizing the need to assess whether medium-term inflation expectations remain anchored around a three-year horizon.
Europe’s economy grew 1.5% in 2025 and entered 2026 on solid footing, with inflation near the ECB’s 2% target before the energy shock hit. Villeroy has forecast inflation returning to around 2% by 2027-2028, suggesting the current spike may prove temporary.
