(Bloomberg) -- The European Central Bank mustn’t take the approach of testing the economy to breaking point and should instead focus on persisting with high interest rates, according to Governing Council member Francois Villeroy de Galhau.Most Read from BloombergChinese Gold Buying Is Driving a Paradigm Shift in BullionIndia-Canada Clash Should Be a Wakeup CallIndians Have Five Days to Deposit $3 Billion in Soon-to-Be-Withdrawn BanknotesWells Fargo Preps for Wealth Battle After $1 Billion Turnar
After raising the deposit rate to 4% this month to contain inflation, the danger of doing too much from here must be balanced with the risk of not doing enough, the Bank of France chief said Monday in a speech in Paris.
“‘Testing until it breaks’ isn’t a sensible way to calibrate monetary policy,” Villeroy said. “This suggests we should now focus on the persistence of policy rather than the constant pushing of rates higher — duration rather than level.” Some of his colleagues at the ECB have taken a more hawkish stance: Bundesbank chief Joachim Nagel said last week that it’s too soon to say rates are at a plateau.
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