ECB’s Villeroy: Rate Cut Likely in June; Pragmatism Remains the Rule

13 March 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Wednesday said that the ECB was likely to reduce interest rates in June in line with a pragmatic approach.

In an interview with French public radio station Radio France, Villeroy, who heads the Banque de France, was asked whether interest rates could be cut from April, this being the first month of spring, to which he answered, ‘Yes, and perhaps more likely in June, but we will be very pragmatic. I have always pleaded for pragmatism; we will see according to the facts.’

The 2% inflation target would be achieved by 2025, he said.

‘Why next year? Because 2% is our objective and it's not just a forecast from the Banque de France’, he said, but rather, ‘barring surprises, it's a commitment.’

Even with inflation going in a ‘very good direction’ and with the victory of monetary policy in sight, the ECB would remain vigilant until the 2% target was met, he said.

‘This disinflation that is underway brings two pieces of good news to support the economy’, he said. ‘The first is that it has created more purchasing power and therefore more consumption, and the second is that it will lead us to lower interest rates, which will facilitate the investment of households as well as businesses.’