The European Central Bank will keep its options open on its next monetary policy moves and inflation developments will be key to how fast it acts, Bank of France head and ECB policymaker Francois Villeroy de Galhau has said.

Villeroy was speaking at the World Economic Forum's "virtual Davos".

He said ECB policy would be focused on ensuring inflation subsides soon and stabilises around its 2% target, down from 5% in December in the euro zone.

"We think that this gradual and sequential approach - first tapering, second lift off, and eventually downsizing - is appropriate. But we keep our full optionality about the speed of this sequence, and will definitely be data driven," Villeroy said.