ECB 'will do what is necessary' to tame inflation, Bank of France governor tells CNBC
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Bank of France Governor Francois Villeroy de Galhau told CNBC the ECB will do what is necessary to bring inflation back to its 2% target in the medium term.
- ECB kept its key interest rate steady at 2% last month because it lacks sufficient data on second‑round inflation effects such as underlying inflation without energy and food, expectations, and wage growth.
- Eurozone inflation rose to 3% in April from 2.6% in March as higher energy prices from the effective closure of the Strait of Hormuz, linked to the Iran war, created first‑round pressure.
- Germany's 10‑year bund yield jumped about 32 basis points, reflecting market volatility and expectations of higher inflation and more hawkish ECB policy.
- LSEG data show most traders price in a 50‑basis‑point rate hike at the ECB’s June meeting, with further increases likely by year‑end.
Why it matters: Eurozone investors face higher bond yields as the ECB signals possible rate hikes to counter inflation driven by soaring energy prices from the Hormuz closure, tightening financing costs for governments and corporates.
