The European Central Bank is prepared to act decisively to keep inflation under control, as rising energy prices fuel uncertainty across the eurozone, a senior policymaker said on Friday.
Francois Villeroy de Galhau, governor of the Banque de France and a member of the ECB’s governing council, stressed that the institution would neither remain inactive nor overreact to current market volatility.
“We have the eyes on the ball and the hands ready to act,” he said in an interview, underlining the bank’s commitment to maintaining inflation at its 2% target.
Rate decisions to be made step by step
Villeroy noted that any changes to interest rates would be decided on a meeting-by-meeting basis. While he indicated that a rate increase is currently more likely than a cut, he did not rule out the possibility of easing if conditions shift.
The ECB held its key interest rate steady at 2% in its latest meeting but is expected to revisit the issue in the coming months.
Energy prices drive inflation concerns
Recent geopolitical developments, particularly the escalating conflict involving Iran, have pushed oil and gas prices higher. This surge raises concerns about increased inflation and slower economic growth across the eurozone.
The bloc, which relies heavily on imported energy, is especially vulnerable to such price shocks, with higher costs likely to filter through to consumers and businesses.
