The next monetary policy move by the European Central Bank (ECB) should be a lowering of interest rates, French central bank chief and ECB policymaker Francois Villeroy de Galhau has said.

However, he declined to give any guidance as to when this could happen.

His comments come after the ECB confirmed on Thursday it is to keep key interest rates at 4 per cent, a record high.

The bank said it was maintaining the rate as inflation was “likely to pick up again temporarily in the near term”, but cuts are expected to come next year to support the shrinking economy.

“The next move should, bearing surprises, be a lowering”, Mr Villeroy told Boursorama television, adding the ECB will be guided only by economic data, and not by calendar considerations.

“We are standing on a plateau where one should take the time to enjoy the view, which means to appreciate the effects of monetary policy”, he added, referring to a potentially prolonged phase of stable high-interest rates.

While Mr Villeroy said the ECB intended to send a message of “confidence and patience” to financial markets, he said recent rate hikes were trickling through into the real economy slightly faster than initially thought.

“Our forecast is (an inflation rate of) 2.1 per cent through 2025,” he confirmed.

While the expected rate reductions will be welcomed, economist Austin Hughes told Newstalk that cuts to interest rates take some time to get as far as borrowers.

“It takes up to two years for interest rates to have an effect, so in that regard, we could still be paying a heavy price when inflation is actually below 2 per cent (the ECB’s target rate for inflation) in a couple of years if the ECB doesn’t move reasonably quickly.”

He added: “There are lots of businesses and households who are struggling with higher interest rates, as well as the cost of living, so I think it’s important that we see some signal early in the new year, hopefully in the first quarter, but certainly in the first half of the year, that says interest rates are not going up anymore, they’re coming down. The direction is the critical thing.”