ECB’s Villeroy: No Date This Year Excluded to Cut Interest Rates

28 January 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Sunday said that the ECB’s interest rates would be reduced in 2024 and that no date was excluded once there was sufficient progress towards the inflation target.

In an interview with French weekly financial newspaper La Tribune Dimanche, Villeroy, who head the Banque de France, said, ‘We will lower our rates this year. On the precise date, none is excluded, and everything will be open in our next meetings.’

‘We will judge based on sufficient progress towards inflation at 2%, and we will have to avoid two risks which have become balanced: cutting too early and then letting go of the target, but also acting too late and excessively slowing down activity’, he added.

Barring any shocks, inflation would converge to the 2% target by 2025 at the latest, he said.

Geopolitical developments were closely monitored and the ECB would adapt its stance if necessary, ‘particularly in the timing of key rate cuts’, he said.

Together with the deceleration of energy prices, monetary policy was decisive in reducing inflation, he said.

‘[M]onetary policy plays a very important role in moderating the rise in prices in services and manufactured goods’, he said. ‘This result gives strong credibility to the action of the ECB.’