The European Central Bank intends to bring inflation back to its 2% target by next year, despite anticipated fluctuations in monthly data this year, according to ECB representative François Villeroy de Galhau on Tuesday.
Last week, the ECB lowered rates by a quarter of a percentage point from a record high but did not commit to further cuts due to robust wage growth and another increase in inflation forecasts.
Villeroy mentioned that monthly inflation data will be volatile due to the energy benchmark effect, a point he emphasized at a financial conference in Paris.
"This 'noise' is not very meaningful, and hence we are still more 'outlook driven' and will look still more closely at the inflation forecast," Villeroy mentioned.
He added that they remain confident that, barring an external shock, they will bring inflation back to their 2% target by next year and achieve it with a soft rather than a hard landing.
Villeroy, who also heads the French central bank, emphasized the importance of a gradual approach to future rate adjustments and noted that the ECB has considerable room to cut rates before monetary policy becomes contractionary.
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