In an interview with Boersen Zeitung, European Central Bank Governing Council member and head of the Bank of France François Villeroy de Galhau reiterated his expectation that the current "hump" in inflation is transitory. As a result, he said, that means we should be patient and vigilant and that premature tightening would be a mistake. 

From today's perspective, he continued, we should end PEPP net purchases in March 2022, though what the ECB does beyond March 2022 remains up for discussion, with a decision to be taken in December. He noted that an increase in the pace of purchase under the APP is a possibility, but not a necessity. 

Market Reaction

EUR/USD continues to trade in the 1.1250 region and has not reacted to Villeroy's remarks.