ECB’s Villeroy expects reaching neutral rate by end of 2022

European Central Bank’s policymaker Francois Villeroy de Galhau said on Wednesday that he estimates the euro area neutral rate at below or close to 2% and added that they could reach it by the end of the year.

“Monetary normalization is fully warranted in the euro area, too early to say what the final interest rates will be, he said adding that “Until we reach neutral rate, we definitely have to act, in a determined but orderly way.”

de Galhau noted that only beyond the neutral rate would tightening begin if needed. He stressed that not having a forward guidance does not mean, cannot mean, not having a narrative and a monetary strategy.”

The EUR/USD pair showed no immediate reaction to these comments and was last seen trading at 1.0002, where it was up 0.32% on a daily basis.