The timing of the European Central Bank's first post-crisis rate hike hinges on whether the euro zone's current slowdown is a blip or a more protracted downturn, ECB policymaker Francois Villeroy de Galhau said in an interview published on Sunday.
The ECB has said it aims to keep interest rates at current record lows at least through the summer, but its longstanding rate guidance is increasingly out of sync with market expectations as growth has slowed. Asked in an interview with Spanish newspaper El Pais whether recent data reduced chances for a hike after summer, Villeroy said the ECB would scrutinise the flow of economic data.
"The key question will be if the slowdown is temporary - with a bounce-back during this year - or more durable," said Villeroy, who is head of the French central bank and seen as a frontrunner to succeed Mario Draghi as ECB President this year. He added that there was a strong convergence of views within the ECB's rate-setting Governing Council about the sequencing of its next policy steps and flexibility about the timing.
ECB policymakers will next meet on March 7, when the bank's staff are expected to slash growth and inflation projections as the euro zone suffers its biggest slowdown in half a decade.
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