PARIS (Reuters) – Bank of France head Francois Villeroy de Galhau, a governing council member of the European Central Bank (ECB), said on Saturday that the spike in oil and fuel prices did not change the ECB’s objective to bring inflation back towards 2% by 2025.
“Gasoline consumption at the pump represents roughly 5% of our total consumption, so it is a small part of total inflation, even if it is what is most visible,” he told France Inter radio.
Brent crude oil prices are trading near $100 a barrel, as investors are focused on the prospect of a supply deficit in the fourth quarter after major producers Saudi Arabia and Russia extended supply cuts.
Villeroy noted that the current rise in energy prices was not as widespread as in 2022 after start of the war in Ukraine, when it included other types of energy and commodities such as grains and metals, making the rising oil price less of a threat to underlying disinflation.
“I will say it again this morning, our forecast and our commitment is to bring inflation towards 2% by 2025,” he added.
Villeroy also reiterated that ECB rates were at a good level and called for patience.
“We have passed the peak of inflation, there even seem to be a turnaround in underlying inflation (…) now we have to be perseverant, keep rates at this level for as long as it takes,” he said. “Patience is more important than raising rates further.”
(Reporting by Sybille de La Hamaide and Gilles Guillaume)