Villeroy Says Economy Now Closer to ECB’s Adverse Scenario

ECB Governing Council member Francois Villeroy de Galhau said the Iran war is pushing the euro-area economy closer to the ECB’s adverse scenario, making the next policy move very likely an increase in interest rates. This raises the probability of further ECB tightening, increasing downside risks to growth and upward pressure on yields and the euro.

Analysis

ECB Governing Council member Francois Villeroy de Galhau said the Iran war is pushing the euro-area economy closer to the ECB’s adverse scenario, making the next policy move very likely an increase in interest rates. This raises the probability of further ECB tightening, increasing downside risks to growth and upward pressure on yields and the euro.