During a speech at Columbia University in New York, de Gallo said that there must be a common predictability of policy-making among central banks, explaining that avoiding big surprises among policy makers is possible if a solution to cooperation is found.
Villeroy de Gallo also noted that the European Central Bank should reach “neutral” rates before the end of this year, explaining that “neutral” rates are the ones that neither stimulate nor slow the economy, estimating them at 2%.
He said that the central bank will not stop raising interest rates now, but will start to follow a policy that suits the current stage, a policy that may be more flexible, based on an accurate economic assessment in each meeting separately.
The European Central Bank’s board decided at its September meeting that the current economic slowdown would not lower inflation enough, leading to a historic high of 75 basis points in order to cool the economy and slow price increases.
The European Central Bank raised interest rates by 50 basis points, last July, for the first time in 11 years, under continuous pressure in order to confront inflation.
The inflation rate in the euro area was 10 percent over a year in September.
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