ECB’s Villeroy: Reaching 2% Rates by September a ‘Possible Scenario’

25 March 2025

By Marta Vilar – MADRID (Econostream) – European Governing Council member François Villeroy de Galhau said on Tuesday that the ECB could reach 2% interest rates by the summer, which meant up to September.

In an interview with German newspaper Frankfurter Allgemeine Zeitung, Villeroy, who heads the Banque de France, said that ‘[t]he easing cycle is neither finished nor automatic.’

Tariffs potentially will not have a ‘significant’ effect on inflation in the Eurozone, he said, so ‘there is still scope for further easing.’

The pace and the level down to which the ECB would keep lowering rates remained open, he said.

The ECB had to take decisions with ‘agile pragmatism’, namely taking into account ‘actual as well as forecasted’ data, and ‘not hesitating to act in an agile manner', he said.

Villeroy acknowledged market expectations of interest rates falling to 2% by the summer.

‘It is a possible scenario, considering that summer in Europe lasts from June till September’, he said.

The ECB had to incorporate the rise in long-term bond yields in Europe, as they meant financial conditions had tightened, he said.

The expected expansionary fiscal policy should not spur inflation due to the weakness still seen in demand, he said.

‘We live in an extremely uncertain world and have to keep a holistic view on all elements. These include US policy, protectionism, but also financial conditions including exchange rates and long term interest rates’, he said.

The disinflation process was ‘solid’, he said.