ECB Governing Council member Francois Villeroy de Galhau said that the ECB faces a greater risk of falling inflation than the risk of accelerating inflation, and the central bank will act if inflation continues to fall below the 2% target. The Bank of France governor said that a stronger euro and cheaper imports from China may reduce consumer price increases by 0.2 percentage points in 2027. He also warned that a more drastic slowdown in wage growth could also bring downward pressure. He said that the upward risks of inflation include supply chain fragmentation and a surge in German government spending. Villeroy said in a speech at the Bank of France: “The downside risk of the inflation outlook is still at least as significant as the upward risk, and we will not tolerate continuing to fall below the inflation target.”

ECB Governing Council member Francois Villeroy de Galhau said that the ECB faces a greater risk of falling inflation than the risk of accelerating inflation, and the central bank will act if inflation continues to fall below the 2% target. The Bank of France governor said that a stronger euro and cheaper imports from China may reduce consumer price increases by 0.2 percentage points in 2027. He also warned that a more drastic slowdown in wage growth could also bring downward pressure. He said that the upward risks of inflation include supply chain fragmentation and a surge in German government spending. Villeroy said in a speech at the Bank of France: “The downside risk of the inflation outlook is still at least as significant as the upward risk, and we will not tolerate continuing to fall below the inflation target.”