|16 July, 2019

ECB should not rely too much on markets for inflation expectations - Villeroy

Global central banks are facing increased calls from politicians on both sides of the Atlantic to conduct easy monetary policies that suit their agendas

Sign of the European central Bank (ECB) is seen ahead of the news conference on the outcome of the Governing Council meeting, outside the ECB headquarters in Frankfurt, Germany, March 7, 2019.

Sign of the European central Bank (ECB) is seen ahead of the news conference on the outcome of the Governing Council meeting, outside the ECB headquarters in Frankfurt, Germany, March 7, 2019.

REUTERS/Kai Pfaffenbach

PARIS - Central banks should not only be independent from political pressures but also from short-term pressures such as financial markets' perceptions of inflation, ECB policymaker Francois Villeroy de Galhau said on Tuesday.

Global central banks are facing increased calls from politicians on both sides of the Atlantic to conduct easy monetary policies that suit their agendas.

Meanwhile, bond yields have dropped recently in the face of weak economic data, putting pressure on central banks to carry out drastic new monetary stimulus to keep inflation expectations from collapsing.

"We take account of market indications, but we must not be market dependent; this includes not relying too exclusively for inflation expectations on market-based measures," Villeroy told a conference at the French central bank, of which he is also governor.

"We are data dependent and I say this in particular for the ECB: in our coming Governing Council meetings, we will assess actual economic data and we will act accordingly if and when needed," Villeroy added.

(Reporting by Leigh Thomas; Editing by Sudip Kar-Gupta) ((leigh.thomas@thomsonreuters.com; +33 1 4949 5143;))

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