ECB likely to reach peak interest rate during within next three meetings, Villeroy says

European Central Bank Governing Council Member Francois Villeroy de Galhau expects that the bank will reach its peak interest rate at some point during its next three meetings, he said Monday. But that doesn't necessarily mean it will increase rates at each of those meetings.

He said the last decision to slow the pace of rate hikes to 25 basis point earlier this month was "wise and cautious", allowing the policymakers to assess the effects of the ECB's rapid round of tightening.

"We already have completed most of our rate-hiking journey, and we are clearly in restrictive territory," Villeroy, who also heads the Bank of France, said Monday at a speech in Paris. "We have three possible Governing Councils either for hiking or pausing."

Reiterating that the Governing Council is committed to bring inflation to its 2% goal, he also emphasized that it "will remain data driven, looking meeting by meeting at the outlook for headline inflation as well as for the dynamics of underlying inflation and the strength of monetary policy transmission."

At the ECB's May 4 meeting, the Governing Council left the door open for further rate hikes, without signaling whether it expects to increase its policy rates.

The ECB's next monetary policy meeting is June 15, followed by July 27 then Sept. 14.

The May decision was the central bank's seventh straight rate hike, bringing its main refinancing rate to 3.75%. It started its tightening campaign by raising that rate by 50 bps at its July 2022 from 0.00%.