Commenting on the policy outlook, European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau said on Monday that he expects a decisive policy meeting in June and an active summer, as reported by Reuters. 

Additional takeaways

“Pace of the further steps will take into account actual activity and inflation data with some optionality and gradualism, but we should at least move towards the neutral rate.”

“We will carefully monitor developments in the effective exchange rate, as a significant driver of imported inflation.”

“A euro that is too weak would go against our price stability objective.”

Market reaction

Despite these hawkish comments, the EUR/USD pair continues to trade in a relatively tight range near 1.0400 in the early European session.