By Scott Kanowsky
Investing.com -- The European Central Bank must take "orderly but determined" action to bring inflation back down to its long-term target, according to Bank of France governor Francois Villeroy de Galhau.
Speaking to French business radio, Villeroy added that consumer price growth is expected to remain high throughout 2023 before it returns to the ECB's desired rate of 2% in 2024.
The comments come after the ECB lifted borrowing costs by 75 basis points - its largest-ever move in interest rates - and highlighted the potential of further increases to come.
The move was at the top end of expectations ahead of the Governing Council's meeting, despite concerns that the move may add to gathering headwinds facing the Eurozone economy. Many analysts - including the bank's own chief economist Philip Lane - have warned that a recession in the bloc is becoming increasingly likely due to the energy crisis sparked by the war in Ukraine and, to a lesser extent, the knock-on effects of pandemic-era stimulus.
Villeroy's colleagues echoed his sentiment on Friday, with Slovakia's central bank chief Peter Kazimir calling the unprecedented rate rise "inevitable and right," adding that even tighter monetary policy will be needed to combat inflation.
Governing Council member Klaas Knot took a similarly hawkish stance, saying that "more steps should follow" Thursday's hike. Knot also flagged that surging prices can "eat away" at consumption and investment if they are not corralled.