Villeroy de Galhau: No Rush on ECB Rate Hikes

# ECB Governor Villeroy de Galhau Addresses Rate Policy at Semafor Event François Villeroy de Galhau, Bank of France governor and member of the ECB governing council, spoke at Semafor World Economy in Washington, DC. He stated the European Central Bank is in no hurry to raise interest rates despite the surge in energy prices caused by the war in Iran.

"We shall have no hesitation to act if and when necessary, but there is no rush," Villeroy de Galhau said.

No Fixed Timeline for Rate Decisions Villeroy de Galhau said there is no predetermined calendar for ECB actions.

"A focus on April would be premature," he added. The central bank must have a critical mass of data on the impact of the energy shock on underlying inflation and economic growth before acting. In early April, Villeroy de Galhau said the ECB’s next move was likely to be a rate increase, with timing depending on events in the Middle East.

The ECB left interest rates unchanged last month.

Inflation Data and Economic Outlook Headline inflation increased significantly in March, according to Villeroy de Galhau.

"Our vigilance is first and foremost on the risk of persistence of inflation," he said. Europe’s economy started 2026 on a strong footing following growth of 1.5% last year and inflation near the ECB’s 2% target, Villeroy said. The ECB modeled three scenarios for the impact of a negative supply shock on the economy, with none showing that a recession was likely.

Fiscal Progress in Eurozone Countries Some countries, including Greece, Portugal, and Spain, had made progress in reducing budget deficits, Villeroy de Galhau said.

Although France has reduced its deficit from 5.8% of GDP to 5.1%, “this is still too much,” he added.

Challenges and Draghi Report Recommendations "The main challenge we have is about innovation and productivity," Villeroy de Galhau said.

He stated European policy makers must carry out the recommendations in the 2024 Draghi report, which include uniting the bloc’s fragmented capital markets, investing more in AI, investing more in energy, and investing more in defense. "The new world order was a significant wake up call for… the European economy," Villeroy de Galhau said. "Believe me it has been listened to," he added.