Higher or longer? That is the ECB’s question

Speeches by Bundesbank president and Banque de France governor stake out divergent positions on ECB governing council

François Villeroy de Galhau
François Villeroy de Galhau
IMF Photo/Kim Haughton

The European Central Bank faces a stark choice in its battle to restore price stability: should it raise interest rates higher than previously forecast or leave them at the terminal rate for longer?

This divide became apparent on June 16 when Deutsche Bundesbank president Joachim Nagel signalled interest rate increases may need to continue after the summer. The same day, Banque de France governor François Villeroy de Galhau offered a different perspective as he stressed the time rates stay in

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