European Central Bank interest rates are likely to peak over the summer and a rate cut this year is out of the question, French ECB policymaker Francois Villeroy de Galhau said on Friday.
In an effort to steer record inflation towards its 2% target, the ECB has raised rates by 300 basis points to 2.5% since last July and promised to deliver another 50 basis point hike in March.
In a speech to financial analysts, Villeroy, who is also governor of France's central bank, said that rates would then "probably" reach their peak in the summer, by September at the latest.
Markets took the ECB's February policy statement as a signal that rates could peak at a lower level than previously thought and investors quickly priced in a 25 basis point rate hike.
A subsequent rejection by a large number of policymakers reversed the market's move, however, and the terminal rate is now seen around 3.75%, suggesting another 125 basis points of rate hikes, including a 50 basis point move in March.
Villeroy said that how long interest rates are kept at their peak is also important, adding that they will be kept high as long as necessary to steer inflation back towards the ECB's 2% target.
