European Central Bank board member Villeroy de Galhau: The risk of inflation falling is greater than the risk of it rising.

European Central Bank board member Villeroy de Galhau said that the bank faces a greater risk of inflation slowing down than of inflation accelerating, and if inflation remains below the 2% target, the central bank will take action. The governor of the French central bank pointed out that the strength of the euro and the decrease in Chinese import prices could reduce consumer price inflation in 2027 by 0.2 percentage points, while warning that further slowdown in wage growth could bring downward pressure. He stated that upward risks include supply chain fragmentation and a sharp increase in government spending in Germany. "The downward risks to the inflation outlook are at least as significant as the upward risks, and we will not tolerate inflation persistently below target," Villeroy de Galhau said. Compared to other members of the European Central Bank, his comments appear more dovish. Villeroy de Galhau stated that the view that the ECB will tolerate low but close to 2% inflation in the long term is a "misunderstanding." He emphasized that the focus should not be on the magnitude of such deviations, but on their persistence.