Villeroy Says Economy Now Closer to ECB’s Adverse Scenario

The Iran war is pushing the euro-area economy closer to the European Central Bank’s adverse scenario, meaning the next policy move is very likely to be an increase in interest rates, Governing Council member Francois Villeroy de Galhau said.

“The prolongation of the conflict is obviously a negative factor,” the Bank of France governor said Thursday at a speech in Paris. As of today, “we are closer to the intermediate adverse scenario than to the baseline.”