ECB’s Villeroy: We Have Enough Confidence to Start Cutting Rates Soon

16 May 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Thursday said that the inflation outlook provided enough confidence for a first interest rate cut soon and that this was likely to happen in June.

Speaking at the 2024 IIF European Summit in Paris, Villeroy, who heads the Banque de France, said, ‘There could be some ups and downs in monthly data in the quarters to come, but [looking at] the outlook, we have enough confidence to start cutting rates, probably very soon.’

‘The probability of a rate cut at our next meeting, in June, is significant’, he added.

‘Our forecast, perhaps today our commitment, barring a major shock, is that we will bring back inflation in the euro area towards our 2% target durably, at the latest by next year’, he said.

Climate change was part of the monetary policy stability mandate, he said, adding that he disagreed with the idea that it was a politicisation of central banks.

‘Even if I’m focused only on the primary [mandate], I cannot, as a central bank, achieve price stability - including its economic component and the economic cycle - without taking into consideration climate change’, he said.