ECB’s Villeroy: Markets Overreacted to Lagarde, Another Cut Possible

12 September 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member François Villeroy said on Friday that another interest rate cut could be possible in upcoming meetings and claimed that markets had overreacted by interpreting President Christine Lagarde’s remarks too hawkishly.

In an interview with French broadcaster BFM Business, Villeroy, who heads the Banque de France, said that “more than ever we must show what I call agile pragmatism.”

For Villeroy, "pragmatism" meant being data- and forecast-dependent and "agile" meant being ready to act.

“There is no predetermined path, but another rate cut is entirely possible at the coming meetings," he said. “From this point of view, I believe that perhaps the markets’ interpretation yesterday showed a certain exaggeration in the restrictive reading, in my opinion.”

US tariffs would not in themselves generate more inflation in Europe, he said.

“In other words, the upside risks to inflation seem to me weaker than the downside risks," he added.

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